Sitting of 27 June 1966

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  MINISTRY OF HOUSING AND LOCAL GOVERNMENT PROVISIONAL ORDER (CITY OF OXFORD)
  Bill to comfirm a Provisional Order of the Minister of Housing and Local Government relating to the City of Oxford, presented by Mr. Richard Cross-man; read the First time; and referred to the Examiners of Petitions for Private Bills, and to be printed. [Bill 61.]
  UNITED KINGDOM OIL PIPELINES
  Bill to empower United Kingdom Oil Pipelines Limited to acquire lands; and for other purposes, read the First time and referred to the Examiners of Petitions for Private Bills.
ORAL ANSWERS TO QUESTIONS
  PENSIONS AND NATIONAL INSURANCE

    Widows
    Mr. Boyd-Carpenterasked the Minister of Pensions and National Insurance what consideration she is giving to a revision of the age of entitlement of childless widows to the National Insurance widows' pension.
    Mr. Pinkasked the Minister of Pensions and National Insurance what proposals she has for introducing a graduated scale of pensions for widows from the age of 35 years.
    Mr. Astorasked the Minister of Pensions and National Insurance what proposals she has to seek power to alter the 50 years of age rule in respect of widows' pensions; and if she will make a statement.
    The Minister of Pensions and National Insurance (Miss Margaret Herbison): The position of childless widows without title to widow's pension is being studied in the course of the Government's general review of social security.
    Mr. Boyd-Carpenter: Does the Minister's study cover in particular the very sharp differentiation which now arises between a widow aged 49 years and 51 weeks and a widow aged 50, and also the possibility of reverting to a lower age?
    Miss Herbison: All these matters are being taken into account. I am surprised that the right hon. Gentleman should ask this question since, as a result of his action when Minister, there are up to 15,000 more widows either with only 30s. or with no pension who would have had a full pension.
    Mr. Pink: Is the right hon. Lady aware of the anomalies existing today? Does not she agree that many of these anomalies would be resolved by a graduated pensions scale related to age?
    Miss Herbison: That is one of the matters to which we are giving attention.

    Death Grant
    Mr. Cleggasked the Minister of Pensions and National Insurance whether, in view of the increase in the cost of funerals due to the Selective Employment Tax, she will take steps to increase the death grant.
    Miss Herbison: No, Sir.
    Mr. Clegg: Will the right hon. Lady keep the position under review, in view of the many opinions about the effect of this tax?
    Miss Herbison: I am certain that almost everyone will understand that the effect of the Selective Employment Tax on a simple funeral which takes the employment of four men for a very short time in the day will be very slight indeed.

    Retirement Pensioners (Leaflet)
    Mr. Blakerasked the Minister of Pensions and National Insurance whether she is aware that the impression of the modern retirement pensioner conveyed by the picture on the cover of leaflet, NI 15, Retirement Pensions of June,

    1207
    1965, is unsatisfactory; and if she will change it.
    Miss Herbison: A million copies of the leaflet carrying this illustration have been distributed so far, with only two criticisms. If, however, the hon. Member has any particular suggestion for a change which he would like to put to me, I shall be glad to consider it.
    Mr. Blaker: Are not the majority of people reaching retirement age a good deal more "with it" than the rather fuddy-duddy couple depicted on the cover of the document? Is it not desirable that the Ministry should give the impression that it feels that such people still have a useful contribution to make to society, and will the right hon. Lady bear this in mind when the time comes to review the document?
    Miss Herbison: I certainly shall. The old couple in the picture are doing what a great many old people do in retirement, gardening for the man and knitting for the woman, but I shall keep in mind what the hon. Gentleman says when we review it again.

    Industrial Death Benefit
    Mrs. Renée Shortasked the Minister of Pensions and National Insurance how many widows are in receipt of the industrial death benefit pension.
    The Joint Parliamentary Secretary to the Ministry of Pensions and National Insurance (Mr. Harold Davies): About 26,000.
    Mrs. Short: I thank my hon. Friend for that Answer, but does not he think that it is about time that these widows, only 26,000 of them, at least had parity of treatment with the former 10s. widow? Is it not time that we really got on with this?
    Mr. Davies: As my hon. Friend will know from my right hon. Friend's Answer to the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) and the hon. Members for Portsmouth, South (Mr. Pink) and for Newbury (Mr. Astor), we are already taking action on this in the general review, and we hope to give satisfactory answers and achieve concrete results soon.
    Mr. Boyd-Carpenter: Is the hon. Gentleman aware that the present position was the result of the advice of the National Insurance Advisory Committee and was avowedly of an experimental nature? Will he persuade his right hon. Friend to look at the matter on the merits and in the light of those facts?
    Mr. Davies: I assure the House that my right hon. Friend needs no persuasion about social security. Within the gamut of the massive job left to us after the Opposition became the Opposition, we are doing what we can.
    Mr. McGuireasked the Minister of Pensions and National Insurance if she will seek to amend section 5 of the National Insurance (Industrial Injury) Act 1965 so as to provide that, in every case where the balance of probabilities supports the contention that death was caused by employment, the doctrine of injury by process will not defeat a claim for industrial death benefit.
    Mr. Harold Davies: This suggestion was carefully examined by an expert and authoritative Committee as part of a comprehensive review of the diseases provisions of the Industrial Injuries Act. The Committee concluded, however, that a change on the lines which my hon. Friend suggests would not be a practicable proposition. I believe, however, that my hon. Friend has in mind the particular case of sudden death following exposure to ethylene glycol dinitrate and nitroglycerine, and my right hon. Friend is considering what might be done about this very unusual condition.
    Mr. McGuire: While thanking my hon. Friend for that reply, may I ask him whether he would not agree with the commissioner's comments in this case, that the Acts were designed for a special purpose, and that the carrying over of a very old doctrine known as the doctrine of injury by process from the old Workmen's Compensation Act is defeating the purpose of the most recent Act? Is my hon. Friend also aware that the commissioner commented that the remedy lay not with him but with the people who make the law, which is us? I hope that we shall do something quickly.
    Mr. Davies: Knowing my hon. Friend's expert interest in this subject, I took the trouble to read the report of the

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    commissioner's decision. I am sure that my hon. Friend will agree that one of the problems—the Beney Committee illustrated it—is that it is very difficult to come to a conclusion on injury by process as against injury by accident. Nevertheless, my right hon. Friend and I have noted what my hon. Friend has said.
    Mr. McGuireasked the Minister of Pensions and National Insurance how many claims for industrial death benefit have been disallowed where death has been caused by prolonged exposure to ethylene glycol dinitrate and to nitroglycerine; and what amount of money has been saved as a result of these claims being disallowed.
    Mr. Harold Davies: I regret that this information is not available.
    Mr. McGuire: I think that this is what is called being snookered with one's supplementary question. I would hope that when the information is to hand [HON. MEMBERS: "Question."] Is the Minister aware that the opinion of many people who take an interest in this subject is that the amount of money is very small, and that this reinforces what I have said previously about the desirability of changing the oboxious rule of injury by process?
    Mr. Davies: While I would not agree with the last part of that sentence, even if we had the statistics about disallowed claims, they would not be of much use because the disallowances vary according to the attitude of the persons concerned to making claims and the advice available to them. In other words, there may be people who should have made claims but have not done so. So long as that is so, the statistics are not of much value.
    Mr. Maurice Macmillan: Is the hon. Gentleman saying that he does not know how many industrial claims of this nature were made and how many disallowed?
    Mr. Davies: No. What I am saying is what I have said in my reply.

    Family Allowances
    Mr. William Hamiltonasked the Minister of Pensions and National Insurance what changes she proposes to make in the system of family allowances; and which outside bodies are being consulted on the problem.
    Mr. Maurice Macmillanasked the Minister of Pensions and National Insurance whether she will seek to introduce a new family allowance scheme providing for the needs of large families whose total earnings are below the current National Assistance scales for such a family.
    Miss Herbison: I cannot usefully add at present to what I said on this subject in the recent debates on the Ministry of Social Security Bill.
    Mr. Hamilton: Could my right hon. Friend say, perhaps in the OFFICIAL REPORT, what bodies she is consulting in this matter? Is she consulting, for instance, the Child Poverty Action Group and representatives from child welfare committees, as the social workers engaged by these committees are doing very useful work in meeting the large families which are suffering great hardship and poverty at this time?
    Miss Herbison: The group which is studying child poverty has given us a great deal of information on this matter, and we pay particular attention to it. Wherever there is any source of help in this work, we shall be most ready to take advantage of it.
    Mr. Macmillan: Can the right hon. Lady give an assurance that when her studies are complete she will have taken into account the shortfall in the growth of our economy under the National Plan, and will she assure us that these people at any rate will not suffer in any way as a result of that?
    Miss Herbison: Certainly. All the problems facing us in this matter are having most serious consideration.

    Scottish Old Age Pensions Association (Representations)
    Mr. William Hamiltonasked the Minister of Pensions and National Insurance what representations she has received from the Scottish Old Age Pensions Association concerning the granting of rates relief to old people; and what was her reply.
    Mr. Bruce-Gardyneasked the Minister of Pensions and National Insurance what representations she has received concerning the burden of rates

    1211
    on retirement pensioners in Scotland; and whether she will make a statement.
    Miss Herbison: I am in correspondence with the Scottish Old Age Pensions Association and am explaining to it the position of supplementary pensioners under the rate rebate scheme and under the rate relief schemes of Scottish local authorities.
    Mr. Hamilton: Will my right hon. Friend confirm that the association appears to be labouring under some misunderstanding, and is she in her correspondence making it abundantly clear that these people are not suffering from the legislation that the Government have introduced?
    Miss Herbison: Certainly. We are trying to make it perfectly clear that what is obtaining in Scotland at present will continue afterwards.
    Mr. Bruce-Gardyne: Is the right hon. Lady also making it abundantly clear that old-age pensioners in Scotland are in many cases suffering as a result of the Government's rate relief scheme, and will she also explain to them that £3 million additional grant is a very inadequate way of fulfilling the Government's undertaking to transfer a large part of the rate burden to the Exchequer?
    Miss Herbison: The hon. Gentleman is quite wrong. No retirement pensioner in Scotland will suffer under the Government's schemes.

    Chronically Sick and Disabled Persons
    Miss Lestorasked the Minister of Pensions and National Insurance how far she has progressed with investigations into the plight of the generally disabled who do not come under the categories of war pensions, industrial injuries or other pensionable groups.
    Mr. Astorasked the Minister of Pensions and National Insurance if she will now introduce a constant attendance allowance to those who are chronically sick or disabled.
    Miss Herbison: The first step towards alleviating the plight of the hardest hit among chronically sick and disabled people has been taken in the Ministry of Social Security Bill. We recognise that there is still a long way to go and we
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    are continuing our study of the problems of these groups.
    Miss Lestor: While thanking my right hon. Friend for that reply, may I ask her whether she is in touch with the various disabled persons' organisations and whether she is aware of the pressure that they are putting on some of us? Also, will the general review give priority to these hitherto neglected categories of people?
    Miss Herbison: Yes, I am very much aware of the pressure, because the groups get in touch with me as Minister. It would be wrong of me to say that first priority will be given to this group, because there are so many groups which need priority, and we have to consider them all in the general review.
    Mr. Astor: Does the right hon. Lady recall that it was a year ago that I asked a similar Question, when she promised to treat the subject as a matter of urgency ahead of the review? Does she recall that as long ago as as February, 1964, she wrote a letter confirming her support for a constant attendance allowance? Can she say whether she is really giving the matter priority?
    Miss Herbison: There are many things that we have to give urgent attention to, and this is one of them. I can give the hon. Gentleman the assurance that we realise the very great need and hope to find a solution to the problem.
    Mr. Hooley: Is my right hon. Friend aware of the special problem of married women who are totally disabled, and whose husbands are in employment, and who, therefore, cannot claim any social benefit?
    Miss Herbison: Yes, they are in a special category, but there are others—for instance, those receiving sickness benefit—who are in very great need also.
    Miss Pike: Will the right hon. Lady accept this as her top priority, particularly as we now have inflation increasing rapidly and diminishing employment prospects for many of these people?
    Miss Herbison: It is very difficult to say that I will accept that as my top priority when I think of the many thousands of children who are in real poverty too. It is a question of examining all these cases and knowing when is the appropriate time to move in each of them.
    Mr. Maurice Macmillanasked the Minister of Pensions and National Insurance what inquiries she is making into the number of disabled persons who receive neither any form of pension nor National Assistance; and whether these inquiries seek to discover both the number of such persons at present cared for in institutions who could with financial assistance live at home and the cost of such assistance compared with the present cost of institutional care.
    Miss Herbison: As part of our review of social security, we have under examination the needs of all chronically sick and disabled people regardless of their age, marital status, means, or position in insurance.
    Mr. Macmillan: I thank the right hon. Lady. Can she give an assurance that she will pay special attention to the point in question if it is clear that the economic situation will make it difficult for her to complete all her plans? This is one method of benefiting the chronically sick and disabled which would not cost, on balance, any more.
    Miss Herbison: All these matters are being examined in the review.
    Mr. Astor: Is it not the case that not only would there be financial saving but also benefit to the disabled if they were able to live at home with their families?
    Miss Herbison: Yes, Sir. Where a disabled person can live at home it is a good thing, quite apart from the saving in expense, both for the disabled person himself and for his family.

    Students
    Mr. Iremongerasked the Minister of Pensions and National Insurance what representations she has received since 15th June from the National Union of Students about students' liability for National Insurance contributions and eligibility for benefits; and if she will make a. statement.
    The Joint Parliamentary Secretary to the Ministry of Pensions and National Insurance (Mr. Norman Pentland): None, Sir. The National Union of Students has however recently published a very useful explanation of the position of students in relation to National
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    Insurance and I am sending a copy to the hon. Member.
    Mr. Iremonger: Surely the hon. Gentleman does not imagine that this explanation was intended to indicate satisfaction? As he will be aware, very large numbers of students will be coming to the House of Commons in the next few days to protest about it. Can he not try to meet them and put forward an amended scheme before they arrive?
    Mr. Pentland: No, Sir; not at all. The Ministry of Pensions and National Insurance has discussed the position of students thoroughly with the National Union of Students, and actually helped the union in the preparation of the booklet a copy of which I shall send to the hon. Gentleman.
    Dame Irene Ward: In view of the difficulties that befall students who do not stamp their cards, would it not be possible to arrange for universities to do it through their bursar's departments week by week? Would that not at any rate help the undergraduate when he leaves the university, so that he will not be faced with a deficiency payment in respect of his contributions?
    Mr. Pentland: That is a question for the Secretary of State for Education and Science. [HON. MEMBERS: "Oh."]
    Mr. David Steel: Is the hon. Gentleman indicating that the Ministry of Pensions and National Insurance has no intention of changing the present regulations about students' contributions? Is he not aware that it has been a grievance among students for some years now?
    Mr. Pentland: Yes, Sir. I have said many times that we fully understand that students have certain difficulties in regard to National Insurance contributions, but I have also said many times that there are other sections of the population who must be given consideration as well as students.

    Deserted Wives (National Assistance)
    Mr. Roseasked the Minister of Pensions and National Insurance how many deserted wives were in receipt of National Assistance during each of the last five years; and how many of these had maintenance orders in their favour.
    Mr. Pentland: As the Answer consists of a table of figures I will, with permission, circulate the reply in the OFFICIAL REPORT.
    Mr. Rose: Does not my hon. Friend agree that it is time that early action was taken about the widespread evasion of maintenance and protection orders through husbands changing employment? Is there not some method of endorsing the National Insurance card with information about an order?
    Mr. Pentland: I take note of that suggestion and will look into it.
    Following is the Table:

    APPROXIMATE NUMBER OF SEPARATED WIVES RECEIVING NATIONAL ASSISTANCE

    End of Year

    In receipt of National assistance

    Thousands Maintenance Order in existence

    1961

    …

    …

    84

    33

    1962

    …

    …

    91

    35

    1963

    …

    …

    102

    40

    1964

    …

    …

    103

    43

    1965

    …

    …

    104

    43

    Widow's Pension
    Mr. Scottasked the Minister of Pensions and National Insurance whether she will take steps to end the anomaly whereby a woman who is widowed for the second time cannot receive a widow's pension by virtue of her first husband's contributions to the National Insurance Scheme.
    Mr. Pentland: This position is a consequence of the general principle under which National Insurance widows' benefits cease on remarriage.
    Mr. Scott: Is the hon. Gentleman aware that very few widows are in this unfortunate position and since, by definition, their misfortune usually verges on tragedy, coud not he find a way around the anomaly?
    Mr. Pentland: I could explain this matter at length, but I assure the hon. Gentleman that any deviation from the principle would involve much wider issues than those indicated by him today.
    Mr. Scott: In view of the unsatisfactory nature of the reply, I beg to give notice that I shall seek to raise this matter on the Adjournment at the earliest opportunity.

    Retirement Pension
    Mr. Scottasked the Minister of Pensions and National Insurance what is the value in real terms of the retirement pension to the latest convenient date compared with the value in real terms at the date of latest increase in March, 1965; and what she estimates would need to be the present value of the retirement pension to keep pace with the rise in average earnings since March, 1965.
    Mr. Pentland: At current prices the single pension is worth about 5s. less than in March, 1965, and the pension for a couple is worth about 8s. 2d. less. An increase corresponding to the rise in earnings would be about 5s. 8d. single and 9s. 2d. for a couple.
    Mr. Scott: Does not the hon. Gentleman remember the Labour Party's pledge to keep pensions in line with rising earnings? Is it not about time that the gap which has become so wide was filled?
    Mr. Pentland: The Government are watching the position very carefully. The value of the pension in real terms is at a much higher level than at any time under the party opposite.
    Miss Pike: Is it the Government's intention to keep the pension, if they can, in line with rising prices or to follow the pattern of the previous 13 years and keep it in line with rising earnings and standards?
    Mr. Pentland: There is a Question on the Order Paper about rising prices and their relevance to pensions. The value of the 67s. 6d. which was the single rate introduced by the Tory Party in May, 1963, would now be equivalent to 75s. 11d. which means that the 80s. rate we introduced is still worth over 4s. more, while the 109s. rate which the Tory Party introduced in their last pensions increase Measure in 1963 would now be equivalent to 122s. 6d., so the present rate of 130s. which we introduced in March, 1965, is still worth 7s. 6d. more in real terms—and I must emphasise "real terms".
    Miss Pike: Will the hon. Gentleman answer my supplementary question?

    Sickness Benefit Drafts
    Mr. Tinnasked the Minister of Pensions and National Insurance whether she will alter the regulations governing the replacement of a sickness benefit draft lost in the post, so that the beneficiary is not compelled to wait seven weeks before receiving payment.
    Mr. Pentland: No, Sir. As I have explained to my hon. Friend a lost draft can be replaced immediately if delay would cause hardship.
    Mr. Tinn: Is not my hon. Friend aware that many people who have suffered from such loss do not appear to be made aware of this provision? Will he take steps to ensure that they are made aware of it? The Ministry is surely better able to bear the occasional loss from abuse than is the average, innocent person who can be put to some inconvenience by having to wait so long?
    Mr. Pentland: This procedure must be followed in order to protect public money but recipients should report the loss of a postal-draft as quickly as possible. Where hardship is involved, the local office can immediately bring forward a replacement. In the particular case my hon. Friend has in mind, the gentleman concerned had actually been back at work five days before he reported that he had lost his draft.
    Mrs. Braddock: What steps are taken to ensure that the person cashing the postal draft is the person it is intended for? Is my hon. Friend aware that in some places where a number of people live in one house, a postal draft may be drawn by someone other than the person to whom it is addressed. There is no request at the post office to ensure that the person drawing the draft is the person it was intended for. Will he look at the situation and consider these difficulties?
    Mr. Pentland: I will certainly look at the position.

    Pensions (Late-Age Entrants)
    21 and 27. Dame Irene Wardasked the Minister of Pensions and National Insurance (1) what contributions have been received anually to date in respect of pensions paid to late entrants under the National Insurance Act, 1948;
    (2) how many late entrants were received under the National Insurance Act, 1948; and how many completions of the 10 years' contributions were registered.
    Miss Herbison: It was estimated that about 500,000 late-age entrants came into insurance at 5th July, 1948, and that about 300,000 of them completed 10 years' insurance.
    I regret that no information is available concerning the amount of contributions received.
    Dame Irene Ward: I thank the right hon. Lady for that information but is it not rather difficult, in dealing with the Insurance Fund, not to have the full figures of contributions and payments available? Did the right hon. Lady base what used to be her opposition to the Bill presented last year by my hon. Friend the Member for Abingdon (Mr. Neave) on these kind of facts?
    Miss Herbison: No, Sir. I opposed it because insurance in this country is based on regular contributions.
    Mr. Boyd-Carpenter: Why are the figures for contributions not available? The contribution rates for these years are known and the right hon. Lady has given the number of people involved.
    Miss Herbison: The rates of contributions paid by them were also paid by many other contributors and were not recorded separately. No one should know that better than the right hon. Gentleman. It is not possible to distinguish them or their effect.

    Pensions (Payment)
    Mr. Kenneth Lewisasked the Minister of Pensions and National Insurance whether she will consider amending the regulations for pension payment whereby Monday is the only qualifying day for payment to commence.
    Mr. Pentland: I have explained in recent correspondence with the hon. Member the reasons for the present arrangement, which I see no cause to change.
    Mr. Lewis: Is the Parliamentary Secretary aware that it is grossly unfair that any person who retires on a Monday and who may be doing a service to his employer—in the case in question it was a local authority—should then find that

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    he loses his pension for the whole of the week? Could not some administrative arrangements be made whereby he picked up what was his due?
    Mr. Pentland: No, Sir. Pension is normally a payment in advance and, provided that entitlement has been determined before payment falls due, as is usually the case, every pensioner should receive a full week's pension within at the most a week of his retirement, regardless of the day of the week in which he retires.

  MINISTRY OF HEALTH

    Medical Laboratory Technicians
    Mrs. Renée Shortasked the Minister of Health what proposals he has for the provision of further education facilities and training of medical laboratory technicians.
    The Minister of Health (Mr. Kenneth Robinson): The Medical Laboratory Technicians Board has made proposals to the Council for Professions Supplementary to Medicine on future training courses, and in this connection I have asked hospitals for information about the staffing of laboratories and facilities for training.
    Mrs. Short: Is my right hon. Friend aware that many student technicians do not get release? Will he, therefore, instruct regional hospital boards to allow them release for block release and sandwich courses, so that they have facilities comparable with those of other professions, jobs and industries?
    Mr. Robinson: The present position is that employing authorities may grant student and junior technicials day release for up to six years and pay course fees and excess travelling expenses. I will consider whether any further advice to hospitals is required in the light of their replies to the questionnaire which I have sent to them.

    Invalid Vehicles (Review)
    33 and 34. Mr. Fortescueasked the Minister of Health, (1) whether, in making his review this year of the question of vehicles for the disabled, he will seek to amend Section 3(1,b) of the National Health Service Act, 1946, so as to resolve any doubt that these vehicles can be supplied legally, without having
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    to rely on a generous interpretation of the Act;
    (2) whether, in making his review this year of the question of vehicles for the disabled, he will give favourable consideration to making regulations so that paraplegics may be provided with two-or four-seater cars with special controls, rather than with single-seater tricycles, the difference in cost between the car and the tricycle being met by the paraplegic; and if he will make a statement.
    Mr. Sharplesasked the Minister of Health what progress he has made with his review of the conditions which have to be satisfied before an invalid vehicle can be issued; and if he will make a statement.
    The Parliamentary Secretary to the Ministry of Health (Mr. Charles Loughlin): My right hon. Friend's review, which he hopes will be completed before the end of the year, will take into account all the representations that have been made to him, including the possibility of amending legislation, but I cannot at this stage forecast what the outcome will be.
    Mr. Fortescue: Is the hon. Gentleman aware that many paraplegics are deprived of their rights under this legislation because they are unable to face driving alone in one of these claustrophobic vehicles? Will he take into account my specific suggestion in Question No. 34—that if they pay the difference themselves, they should be able to have proper motor cars?
    Mr. Loughlin: My right hon. Friend will take account of all the representations which have been made to us—and, of course, we have had representations on behalf of a number of categories of patient. While we will take account of the hon. Gentleman's suggestion, I cannot offer any hope that we shall introduce a new principle into the scheme—a new principle which may be more inequitable than the hon. Gentleman realises.
    Mr. Sharples: Will the hon. Gentleman take account particularly of the needs of people who are unable to use public transport and, in considering whether to grant an extension in this direction, will he bear in mind the hard case which I referred to the Minister?
    Mr. Loughlin: We are examining every aspect of this problem and I can assure the hon. Gentleman that when we report to the House, although we will not satisfy everybody, it will be a substantially improved scheme.
    Mr. Braine: Is the hon. Gentleman aware that we on this side of the House would wish him sympathetically to consider the proposal in Question No. 34? It would cost very little, but it would be a great boon to paraplegics. Does the review to which he has referred cover the possibility of the issue of vehicles to those who need transport to work and who are virtually immobilised by a condition other than a locomotive disability?
    Mr. Loughlin: As I have said, we are examining every possibility, but I thought that it was essential that I did not convey the impression that we would necessarily accept the principle included in Question No. 34.
    Mr. Evelyn King: Is the hon. Gentleman aware that these vehicles are not only unpopular because they are single seaters, but are also entirely unreliable as I know, having spent many hours trying to start one by pushing it? Is he further aware that when a disabled person tries to help himself or herself by buying a vehicle out of his own funds, as is allowed under the regulations, the Ministry makes a profit of not less than £60 a year out of that person, a state of affairs which ought to cease?
    Mr. Loughlin: I am not prepared to accept the hon. Gentleman's contention, because, while there may be individual vehicles which are unreliable, my Ministry goes to the nth degree to ensure that a patient is fully mobile as far as is humanly possible. I know from my own personal experience from patients I have met how invaluable these vehicles are to patients.

    Health Week (Rotherham)
    Mr. Winnickasked the Minister of Health how long he expects to take to reach a decision on the value of the Rotherham scheme of having a full-scale local health week.
    Mr. K. Robinson: Medical officers of my Department are discussing with the Medical Officer of Health for Rotherham
    1222
    the lessons to be learnt from this work, and his plans for other tests to be used in another health week this autumn. In the course of these discussions we hope to reach a considered view on the value of such weeks.
    Mr. Winnick: Would not my hon. Friend agree that Rotherham's scheme was an excellent one? Will he give a promise that he will try to encourage other local authorities to follow suit in the next few months?
    Mr. Robinson: I do not wish to imply that the health weeks in Rotherham have not found undetected disease in a number of people, but I am not satisfied, on present evidence, that this method of detecting disease should be recommended to health authorities generally.
    Mr. O'Malley: Is the Minister aware of the acute dismay which has been felt in all sections of my constituency as a result of his previous Answer on this subject? Is he further aware that many people feel that this is a curious way to recognise all of the hard work and cooperation which has gone on within the medical profession in Rotherham to set this up? Would he not agree that many of the tests already undertaken in these screening clinics are widely accepted in the medical profession?
    Mr. Robinson: I described the scheme as experimental. I agree that it is important to find the best and most economical methods of the early detection of disease. There is a need for experiment in this direction, but I hope that my hon. Friend will accept from the fact that my Department is discussing this matter with the Medical Officer of Health for Rotherham, that we are taking this very seriously.
    Mr. O'Malley: In view of the unsatisfactory nature of that reply, I beg to give notice that I shall raise this matter on the Adjournment.

    Motor Accidents (Charges for Treatment)
    Mr. Geoffrey Lloydasked the Minister of Health if he will take steps either to revise the methods of recovery or wholly to remit charges payable under the Road Traffic Act, 1960, on account of hospital or emergency treatment of persons involved in motor accidents.
    Mr. K. Robinson: I will bear the right hon. Member's suggestion in mind, but legislation would be required.
    Mr. Geoffrey Lloydasked the Minister of Health how much was collected as payment for hospital or emergency treatment under Sections 212 and 213 of the Road Traffic Act, 1960, during the last year; and what he estimates to be the cost of collection of these sums by hospital authorities under Section 214 of the Act.
    Mr. K. Robinson: Hospital income under Sections 212 and 213 of the Road Traffic Act, 1960, in the year ended 31st March, 1965, was £578,000, most of which related to Section 212. Up-to-date information about the cost of collections by hospital authorities is not available centrally.

    Hearing Aids
    Mr. Sharplesasked the Minister of Health what steps he is taking to reduce the time taken between the prescription of hearing aids under the National Health Service and their issue.
    Mr. Loughlin: Delays in the issue of hearing aids are due primarily to local staffing difficulties and I hope that recent improvements in the career structure and salaries of audiology technicians, and the advice my right hon. Friend has given to hospital authorities on their training will help to improve staffing. Special measures are being taken at one hospital where difficulties are particularly acute.
    Mr. Sharples: Is the hon. Gentleman aware that it now takes something over 12 months for a hearing aid to be issued through the St. Mary Abbots hearing centre, which is one of the largest centres in London? Would he look upon this matter as one of urgency?
    Mr. Loughlin: We are very conscious of this, but let us be quite frank. This is not typical. We are aware of this particular difficulty and are looking at it as expeditiously as we can.
    Dr. Winstanley: Is the hon. Gentleman aware that there has recently been an alarming increase in the number of door-to-door salesmen selling these appliances privately? Would he agree that this undesirable tendency will increase if there are any deficiencies in the public supply?
    Mr. Loughlin: We agree that there has been a tendency for specialised sales methods in this sphere. We are looking very closely at the whole question of hearing aids, both for the few who are at present outside the scheme, and our existing units.

    Advisory Committee on Drug Addiction
    Mr. Braineasked the Minister of Health whether he has yet decided upon the composition and terms of reference of the Advisory Committee on Drug Addiction; and whether he will make a statement.
    Mr. K. Robinson: I have nothing as yet to add to my reply to the right hon. Member for Ashford (Mr. Deedes) on 13th June.
    Mr. Braine: Is the right hon. Gentleman aware that it is nearly two months since he told the House that the composition of the Committee and its terms of reference were being urgently considered and that it is nearly seven months since the Brain Committee reported on the matter? Would the Minister tell the House whether it is a fact that the medical profession considers this matter so urgent that it has urged him to set up treatment centres ahead of setting up the Committee? Can he tell the House what consultations there have been with the B.M.A. and how many treatment centres have been established?
    Mr. Robinson: The consultations are comprehensive. I do regard this as a matter of urgency, and I can assure the hon. Gentleman that I hope to make a further announcement well before the Recess.

    Handicapped Children and Young People (Education, Health and Welfare Services)
    Mr. Dickensasked the Minister of Health when the reviews being undertaken by local authorities in response to Circular 7/66, Co-ordination of Education, Health and Welfare Services for Handicapped Children and Young People, will be complete.
    Mr. Loughlin: Reports are asked for by 30th September.
    Mr. Dickens: Is my hon. Friend aware that the provision for handicapped children, especially for mentally handicapped children, in my constituency in general is utterly inadequate? Would he please do what he can, after 30th September to expedite consideration of this review and take early subsequent action?
    Mr. Loughlin: This question obviously relates to the general review. I have no information at my fingertips about the hon. Gentleman's constituency, but I can assure him that we are very concerned about this question, and that is the reason why we issued this Circular in conjunction with the Department of Education and Science, and asked for reports so quickly.
    Mr. Evelyn King: Would the Minister bear in mind that many physically handicapped persons can earn their living only in the intellectual capacity, and that they are prevented from going to universities and other places of education, not on mental grounds, but because of the lack of lifts and ramps? Would he use his influence to bring that point before those who design educational buildings?
    Mr. Loughlin: I will take note of what the hon. Gentleman says.
    Mr. Moyle: Is the Minister aware that this has been a totally neglected subject hitherto and that many people are looking forward to the completion of this review in the hope of securing relief? Will he, therefore, press it to a conclusion at the earliest possible opportunity?
    Mr. Loughlin: I agree with my hon. Friend, but we cannot press the review to an early conclusion prior to receipt of the reports. Once these reports are available—there will be the possibility of having to grant extensions, for a short period of time to some local authorities—I can assure my hon. Friend that we shall act very quickly.

    Smallpox
    Mr. George Craddockasked the Minister of Health, in view of smallpox outbreaks in various parts of the country, what special instructions have been issued
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    in his Department to allay public concern; and if he will make a statement.
    Mr. K. Robinson: As indicated in Answers to Questions by the hon. Member for Cheadle (Dr. Winstanley) on 3rd May and my hon. Friend the Member for Pontypool (Mr. Abse) on 22nd June, the recent illnesses in the Midlands and. Pontypool were mild.
    A revised and up-to-date memorandum, on the Control or Outbreaks of Smallpox was sent to medical officers of health in England and Wales in September, 1964. The medical staff of my Department and the Welsh Board of Health have been in close touch with the medical officers of health of the areas affected, and my Chief Medical Officer has been communicating the latest information to all medical officers of health.
    Mr. Craddock: I thank my right hon. Friend for his Answer. Does not he think that greater emphasis on vaccination would help in this matter?
    Mr. Robinson: Of course, emphasis on vaccination as a general policy is helpful. But we did not consider that in either of these instances there was a case for a mass local vaccination programme.
    Mr. Braine: In order that the House and country can get this matter into some sort of perspective, would the right hon. Gentleman confirm that most, if not all, of these cases were variola minor, which is quite different from variola major, and that there is no reason to be alarmed provided that adequate precautions are taken by medical offices of health?
    Mr. Robinson: That is the case, and I am glad to have this opportunity of confirming it. The Midlands outbreak consisted of 45 cases, of whom 29 were treated in hospital and 16 diagnosed in retrospect after recovery. It is three weeks since the last Midlands case was admitted to hospital.

    Prescriptions (Cost)
    Sir J. Langford-Holtasked the Minister of Health what has been the total annual net cost to Her Majesty's Government, including administrative costs, of prescriptions under the National

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    Health Scheme for the years 1963–64, 1964–65, and 1965–66.
    Mr. K. Robinson: The total net payment by the Exchequer for prescriptions dispensed by chemists and dispensing doctors in Great Britain—excluding administrative costs—was approximately £85 million in 1963–64 and £104 million in 1964–65; the provisional figure for 1965–66 is £149 million.
    I am afraid that the administrative costs and the costs of prescriptions for hospital outpatients are not separately distinguished in the accounts.
    Sir J. Langford-Holt: Can the right hon. Gentleman tell us what he considers to be the cause of this very considerable increase and what he expects the figures will be in the next year?
    Mr. Robinson: I should not like to forecast what will happen next year. We have had many exchanges in the House about the very complex reasons for the increase in the number of prescriptions. Even with the increase, the number of prescriptions per head of the population last year was still fractionally below the figure of about 11 years previously.
    Mr. Fisher: Does the right hon. Gentleman sincerely believe that the very large extra cost of abolishing prescription charges is being more wisely spent for that purpose than it would be on other considerable needs in the Health Service, such as cervical cancer smears, more maternity beds in hospitals, more modern equipment, family planning facilities, and so on?
    Mr. Robinson: These things are being done. We have constantly declared our intention to devote increased resources to the National Health Service. We do not believe that levying a tax on the sick is the way to obtain the necessary finance.

  HOSPITALS

    Hospitals, Birmingham (Accommodation)
    Mr. Gurdenasked the Minister of Health what is the amount of surplus operating and bed accommodation in hospitals in Birmingham.
    Mr. Loughlin: Nil, Sir; changes in distribution and use of accommodation may occur as the new developments envisaged in the Hospital Building Programme are completed.
    Mr. Gurden: Is the hon. Gentleman aware that the new development will create difficulty by taking Moseley Hall Hospital from the ear, nose and throat service, and that this is a very unsatisfactory decision for the people of Birmingham?
    Mr. Loughlin: No, Sir. The Moseley Hall Hospital is being closed for major repairs due to dry rot. It will be open within the next few weeks. There is a plan to introduce into the grounds a substantial geriatric unit, but any change of use of the Moseley Hall Hospital will have to be considered by my right hon. Friend who would take into account all the circumstances at the time.
    Mrs. Knight: Does the hon. Gentleman's reply mean that when Moseley Hall is reopened, it will be merely a geriatric unit, or will E.N.T. provision continue to be made there?
    Mr. Loughlin: When Moseley Hall is reopened, existing services, that is, those which existed prior to its closure for repair, will continue. The other is an additional scheme. If the hospital board wishes to change the use of the hospital, that must go to my right hon. Friend.

    Hospitals, Essex (Beds)
    Mr. Biggs-Davisonasked the Minister of Health what is now the shortage of maternity beds and beds for geriatric and mental cases, respectively, in hospitals serving the administrative county of Essex; and what is the staff shortage in such hospitals.
    Mr. Loughlin: Approximately 140 maternity beds, 350 geriatric, and 330 for mental subnormality; but these hospitals also serve other areas. Figures for additional staff requirements are not available.
    Mr. Biggs-Davison: Nevertheless, would not the hon. Gentleman agree that there is a considerable shortage? Can he hold out any hope of improvement?
    Mr. Loughlin: We agree that there is a considerable shortage. However, the hon. Gentleman should recognise that the catchment areas of hospitals are not always conterminous with local authority areas, so that he should not read too much into the figures. There is a shortage, but it has been there for a considerable time.
    Mr. Ridsdale: Is the hon. Gentleman aware that we challenge his figures? What year has he used as the base for estimating geriatric requirements? Is he aware of our concern in Essex about the cut-down in old people's homes which has been forecast?
    Mr. Loughlin: I think that the figures are for the Hospital Building Programme, which is fairly recent. The difficulty of using figures of this kind is that the two areas are not conterminous and unless one is very careful, one uses figures which are not in the same family and, as a result, an incorrect comparison is made.
    Mr. Braine: Is my hon. Friend aware that his Ministry has already cut down welfare provision for the elderly in Essex, a county where the population is increasing at the rate of 30,000 a year? Does his Answer mean that he is satisfied that Essex is getting a fair proportion of the resources for geriatric accommodation? How do these figures compare with those for the country as a whole?
    Mr. Loughlin: The hon. Gentleman must not make these statements. We have not cut down welfare provision for Essex. So far as I know, Essex compares reasonably with the rest of the country.
    Mr. Ridsdale: In view of the unsatisfactory nature of the reply, I beg to give notice that I shall seek to raise the matter on the Adjournment.

    South-West Metropolitan Area (Former Nurses)
    Mr. Onslowasked the Minister of Health which hospital authorities in the South-West Metropolitan Regional Hospital Board area do not have arrangements for keeping in touch with former nurses living in their areas.
    Mr. Loughlin: The psychiatric hospital authorities in general do not have such arrangements.
    Mr. Onslow: While thanking the Minister for that more carefully researched reply, may I ask him to draw to the attention of the hospital authorities in this area the need for improving such arrangements as they do have, because the shortage of staff certainly gives no grounds for the sort of complacency revealed in correspondence that I have had with him?
    Mr. Loughlin: I assure the hon. Gentleman that there is no complacency about this. We are as conscious of this as he is, and I think that the hospital boards are conscious that we have to utilise part-time staff as far as possible. Guidance has been issued to hospital authorities about the various measures that should be taken to keep in contact with part-time nurses and midwives.

    New Hospital, Camberley
    Mr. Onslowasked the Minister of Health when preliminary planning of the proposed new hospital at Frimley Park, Camberley, will begin; and what is the earliest date, in the light of the Government's Hospital Building Programme, Command Paper No. 3000, when this hospital will be in use.
    Mr. K. Robinson: Preliminary planning of the proposed new hospital at Frimley Park has already begun; the hospital building programme is under continuous review and I cannot forecast the earliest date when this hospital will be in use.
    Mr. Onslow: Is the Minister aware that his inability to forecast the earliest possible date will cause great disappointment in my constituency? Since planning has begun, will he agree to receive a deputation of local authority representatives and doctors, who are united in agreeing that his present plans will be quite inadequate?
    Mr. Robinson: The reason why I am not prepared to make a guess, and it could only be a guess, at this stage is that some schemes may start and finish earlier than at present anticipated. I repeat that this is a flexible programme and subject to continuous review.

    Cervical Cancer Tests (Publicity)
    Mr. Moonmanasked the Minister of Health what was the total amount spent in 1965 by the regional hospital management committees on publicising smear tests for cancer.
    Mr. K. Robinson: Nothing, Sir. Once a routine screening service for cervical cancer is available locally, I would expect it to be brought to the notice of the women concerned by the local health authorities and general practitioners, either by general publicity or by personal approach.
    Mr. Moonman: Is the Minister aware that his reply will cause some dismay among large sections of the public in that it merely suggests a mild demonstration of Government interest in the matter? Would he also be prepared to consider the setting up of a national company on the matter, taking responsibility away from local authorities?
    Mr. Robinson: No, Sir. I do not for one moment accept the inference drawn by my hon. Friend from the reply. The fact is that wide publicity has already been given in the Press and through women's organisations to the value of cervical smears as a means of detecting cervical cancer. It is a matter for local authorities and general practitioners rather than for regional hospital boards.
    Dr. Summerskill: Would not the Minister agree that the reason why there is not increased publicity on this matter by general practitioners and local authorities is that the demand would increase to such an extent that the facilities would not be adequate to meet it?
    Mr. Robinson: This is perhaps one reason for not having greater publicity in some areas at present. Publicity to bring women forward to take these tests ought, as far as possible, to go hand in hand with the development of facilities for examination of smears.
    Mrs. Anne Kerr: Would not my right hon. Friend agree that at the very least Members of Parliament who have been pressing for these facilities shall be informed when they are brought into practice?
    Mr. Robinson: I am always ready to answer Questions from individual Members about their constituencies.

  MINISTRY OF LABOUR

    Lower-Paid Workers
    Mr. Winnickasked the Minister of Labour if he will consult with industry in the private and public sectors with a view to legislation to increase the pay of those employees whose earnings are less than if they were on National Assistance.
    The Minister of Labour (Mr. R. J. Gunter): I doubt whether such legislation is the right way to deal with this very complex problem.
    Mr. Winnick: Is it not absolutely disgraceful that there are people with families who are paid less than they would receive if they were on National Assistance? Is not this one way of doing away with the notorious wage stop? Would not my right hon. Friend agree that it is part of a positive incomes policy that such people in the lower income groups should be helped?
    Mr. Gunter: I doubt very much whether the minimum wage suggested would answer the problems which my hon. Friend raises. Much of the poverty arises from large families, and the minimum wage suggested would not meet that point.
    Sir K. Joseph: Surely the right hon. Gentleman will agree that the hon. Member for Croydon, South (Mr. Winnick) has raised a most important subject. Will he assure us that either through industry from his Department or by social methods through one of his colleagues' Departments the Government will deal urgently with this very serious problem?
    Mr. Gunter: My right hon. Friend the Minister of Pensions and National Insurance, as the right hon. Gentleman knows, is now conducting a survey from which we might obtain better statistics on this matter.

    Local Government (Training)
    Mr. Moonmanasked the Minister of Labour when he will establish an industrial training board for local government.
    Mr. Gunter: Local government as such is not within the scope of the Industrial Training Act. Activities of a commercial or industrial character carried out by local authorities are being brought within the scope of the appropriate training boards.
    Mr. Moonman: Is my right hon. Friend aware that this would enable opportunities to be provided for staff in local government? Would he be prepared to provide some facility to avoid the untidy and sometimes chaotic method of training in local government?
    Mr. Gunter: My hon. Friend will know, I think, that the local government examination boards put forward a plan early this year for local authorities to deal with staff who were not already embraced by the industrial training boards. There is a measure of local government activities which is already covered by the industrial training boards which have been set up.

    Disabled Persons Register
    Miss Pikeasked the Minister of Labour whether he will take special steps to ensure that as many disabled persons as possible are put on the Disabled Persons Employment Register before any payment of the Selective Employment Tax becomes due.
    Mr. Gunter: No, Sir. Enrolment on the Disabled Persons Register is voluntary but every opportunity is already taken to bring the benefits of registration to the notice of persons who are substantially handicapped in obtaining or keeping employment.
    Miss Pike: Is not the Minister aware how very urgent this matter is? The unemployment rate among these people is five times higher than the national average. I am sure that the right hon. Gentleman, like us, wants to know what effect the Selective Employment Tax will have on these people. Therefore, we must have the information as quickly as possible.
    Mr. Gunter: I am sure that the hon. Lady knows that the Ministry of Labour always does its best to make the register of disabled persons as complete as possible. But we must retain it on a voluntary basis. We cannot make a
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    person register if he or she does not want to do so. On the latter part of her supplementary question, the hon. Lady will know that probably the majority of the disabled persons will be in the manufacturing industries. We shall, however, keep a very careful watch on the subject.
    Miss Pike: The point which I was trying to make was not that I wanted these people to be forced to register, but that the maximum amount of publicity should be given to this matter. Although there will be a refund, surely the right hon. Gentleman will accept that these people will still be at a disadvantage, because on the whole they are part-time workers and will still be uneconomic.
    Mr. Gunter: I remind the hon. Lady that the Disabled Persons (Employment) Act and its quota will still exist and therefore there will be cover for disabled people.

    SPANDAU (PRISONERS)
    Mr. Biggs-Davisonasked the Secretary of State for Foreign Affairs what has been the cost so far to the British taxpayer of the incarceration at Spandau of Germans convicted at Nuremberg in 1947; which have been released, when, and on what grounds; which remain in prison; when the latter's future was last discussed by the four Powers concerned, and with what result; and what consideration was given to their release or confinement elsewhere.
    The Minister of State for Foreign Affairs (Mrs. Eirene White): The total cost to Her Majesty's Government to date of maintaining Spandau prison has been about £147,000. Details of prisoners already released will be circulated in the OFFICIAL REPORT. The remaining prisoners are Speer and von Schirach, due to be released on 1st October on completion of their sentence, and Hess, who was sentenced to life imprisonment. The release of these three has been the subject of exchanges in the past among the four Powers concerned, but it was not possible to reach agreement.
    Mr. Biggs-Davison: But is not the expense out of all proportion? Do the four Powers intend to review the sentence of Hess, or do they intend to keep this

    1235
    rigmarole going for one prisoner only who might well be confined somewhere else?
    Mrs. White: The hon. Gentleman will be aware that the German authorities now bear the main cost of this prison. The future of Hess is a matter for determination by the four Powers.
    Mr. Shinwell: Is it not remarkable that any hon. Member opposite or elsewhere should ask for the release of these rascals and yet wish to keep train robbers in prison for 30 years?
    Mr. Biggs-Davison: On a point of Order. I asked for no such thing.
    Mr. Hogg: Is it not a pity to turn this kind of question into a party issue?
    The following are the details:
    Von Neurath and Raeder were released on 6th October, 1954, and 26th September, 1955, respectively on grounds of age and ill health; Doenitz on 1st October, 1956, on completion of his sentence, and Funk on 16th May, 1957, because of ill health.

SOUTH-EAST ASIA TREATY ORGANISATION
Mr. Eldon Griffithsasked the Secretary of State for Foreign Affairs if he will state his policy on the South-East Asia Treaty Organisation.
Mrs. White: Our policy continues to be to support the South-East Asia Treaty Organisation. My right hon. Friend the Foreign Secretary will be making this known at the Ministerial Meeting of the organisation which opened today in Canberra.
Mr. Griffiths: While I appreciate that the Secretary of State is at present at the S.E.A.T.O. meeting, may I ask whether his hon. Friend can make clear, first, whether the right hon. Gentleman is negotiating for British troops to be sent to Thailand, and secondly, in view of the Prime Minister's statement about massive reductions in British forces in the Far East, whether she is sure that Britain can maintain her obligations to S.E.A.T.O.?
Mrs. White: The hon. Member would be well advised to await the return of my right hon. Friend. The hon. Member has, I think, a Question down for 11th July in any case.
Mr. Sandys: Are we to understand from what we have read of the Foreign Secretary's speech that talks are going on with a view to establishing a British base in Australia?
Mrs. White: Any question of that kind would be better directed to my right hon. Friend the Secretary of State for Defence.
Lord Balniel: As we are shortly to withdraw from Aden, as the carrier building programme is now being cancelled and as we are now informed by the Government that they are planning a massive reduction in troops, is not doubt cast upon the credibility of our implementing our S.E.A.T.O. undertakings?
Mrs. White: I do not think that there is any question of casting doubt upon our ability to implement our undertakings. These discussions are taking place with our allies. I have no doubt that my right. hon. Friend will give a very good account of Her Majesty's Government's policy.

RHODESIA (TALKS)
Mr. Maudling Mr. Maudling (by Private Notice) asked the Secretary of State for Commonwealth Relations whether he will make a statement on the adjournment of the discussions with Rhodesian officials.
The Secretary of State for Commonwealth Relations (Mr. Arthur Bottomley): The exploratory talks with Rhodesian officials have not been adjourned. Mr. Oliver Wright, a member of the British team, has returned to London to report to the British Government, but the talks are continuing.
Mr. Maudling: We are all glad to hear that talks are continuing. Can the right hon. Gentleman give any estimate of when he expects to see substantial progress of a character which could be reported to the House?
Mr. Bottomley: No, Sir. I do not think that I can add anything further. The talks are continuing. We can all express hopes as to the future.
Mr. Thorpe: Since the object of the talks was merely to explore whether there were matters upon which negotiations

1237
could subsequently take place, may we know what there is left to explore?
Mr. Bottomley: Obviously, there is something still worth exploring, otherwise the talks would not be continuing.
Mr. Mendelson: Has my right hon. Friend seen the statement attributed to Mr. Smith that in his opinion it is not really difficult to come to an agreement and that no real difficulty is at stake? In the light of that statement, will my right hon. Friend reaffirm that Her Majesty's Government will not enter into serious negotiations unless it is quite clear the five principles outlined by the Prime Minister are being fully adhered to?
Mr. Bottomley: Yes, Sir.
Mr. Sandys: While we cannot expect the Secretary of State to give us any detailed information about the talks, may I ask him whether it has been made clear that the British Government are no longer insisting on a return to direct Governor's rule, because otherwise the talks are a sheer waste of time?
Mr. Bottomley: No, I think that the Government have made it clear that there must be a return to constitutional rule. That is the requirement.
Mr. Winnick: Will my right hon. Friend confirm that the sanctions against the illegal régime are still being vigorously applied?
Mr. Bottomley: Yes, Sir.
Mr. Biggs-Davison: I gave notice to you, Mr. Speaker, that I intended to seek leave to move the Adjournment of the House. Is this not the appropriate moment?
Mr. Speaker: I received the hon. Member's message. This is not the appropriate moment.

SECRETARY OF STATE FOR DEFENCE (PERSONAL STATEMENT)
The Secretary of State for Defence (Mr. Denis Healey): I wish to make a personal statement regarding a speech which I made on Saturday outside the House, which has been reported widely in the Press. In that speech I was speaking of the need to be loyal to our
1238
alliances as a condition for being able to speak with authority on their behalf to others.
I had occasion to illustrate my remarks by a reference to the French policy in N.A.T.O. and the E.E.C. I much regret that, in doing so, I used words which, on reflection, I think I should not have used. I trust that the House will accept that I did not intend any personal discourtesy.

SECRETARY OF STATE FOR DEFENCE (SPEECH)
Mr. Biggs-Davison: Despite the statement which has just been made by the Minister of Defence, I regret, Mr. Speaker, that I must ask leave to move the Adjournment of the House under Standing Order No. 9 for the purpose of discussing a definite matter of urgent public importance, namely,
"the speech of the Secretary of State for Defence, to which reference has just been made."
That this is a definite urgent matter of public importance is shown by the fact that the right hon. Gentleman has come to the House as quickly as possible to make the statement that he has made, a statement which, the House will note, contains no reference to his intention to resign his office. That it is a matter of urgent public importance is shown by the fact that this happened on the eve of the visit of the French Prime Minister to this country.
Mr. C. Pannell: On a point of order, Mr. Speaker. I wish to address you, Mr. Speaker, on the question of a personal statement, which I have always understood is not debatable. I wish also to ask whether an hon. Member is entitled by a stratagem to get round the idea that a Private Notice Question has been refused to him.
I have always understood that if anyone approaches Mr. Speaker for his Ruling on a Private Notice Question, it is an informality and is a courtesy on the part of the Chair. On an occasion last week and this morning, from the same hon. Member, it has been leaked to the Press as a stratagem. I do not think that this is in order and it is a matter, Mr. Speaker, on which I invite your Ruling.
Mr. Speaker: I have nothing to do with what hon. Members release to the

1239
Press. I called the hon. Member for Chigwell (Mr. Biggs-Davison). He is perfectly in order in what he is doing.
Mr. Biggs-Davison: There have been quite a number of releases to the Press about the intentions of right hon. and hon. Members. I must confess that I was under the impression that requests to move the Adjournment of the House under Standing Order No. 9 sometimes preceded personal statements, but I accept, of course, the procedure that we are following under your guidance, Mr. Speaker.
Finally, I submit that it is important for the sake of Anglo-French relations, and a definite and urgent matter of public importance for the sake of Anglo-French relations, the key to our European policy and our technological future, that this House should have an early opportunity of reaffirming its friendship with France.
Mr. Speaker: The hon. Member asks leave to move the Adjournment of the House under Standing Order No. 9 for the purpose of discussing a definite matter of urgent public importance, namely,
"the speech of the Secretary of State for Defence, delivered in London on Saturday, in the course of which the right hon. Gentleman grossly insulted the President of the French Republic, a friendly and allied State."
I thank the hon. Member for his courtesy in intimating to my Department that he proposed to raise this matter under Standing Order No. 9. This is not the first occasion on which an application under Standing Order No. 9 has been made to deal with the speech of a Minister made outside this House. It has seemed to the Chair wrong in the past, and in my view it would be wrong now, to allow the Adjournment of the House to be moved, because the application cannot succeed on the ground of urgency. The words have been said and an explanation of them has just been given to the House. There is nothing, it seems to me, that the House could do by interrupting the Orders of the Day to change the situation.
It seems to me that the proper course for hon. Members who seek to criticise this matter is to put down a Motion of censure if, on further reflection, they see
1240
fit to do so, or to use all the other recognised Parliamentary methods which arise. This does not seem to me to be a case which comes within the Standing Order on the ground of urgency.
Mr. Speaker: Mr. Macleod.
Sir H. Legge-Bourke: On a point of order. I think that you know, Mr. Speaker, that I would be the very last Member to wish to question any Ruling which you made, but I would put it to you, very humbly, if I may, that, when you said that the Minister himself had given an explanation today, that was not an entirely accurate description of what the Minister had attempted to do, which was to make an apology.
Mr. Speaker: That seems a matter of semantics at the moment. I am glad that the hon. Member is not seeking to question the Ruling which I gave under Standing Order No. 9. Mr. Macleod. A point of order.

OFFICIAL REPORT (ALTERATION)
Mr. Iain Macleod: I wish to raise a point of order of which I have given you, Mr. Speaker, and the Chancellor of the Exchequer, notice.
Winding up last Thursday's debate on Second Reading of the Selective Employment Payments Bill the Chancellor of the Exchequer quoted an illustration of a farmer whose turnover was £60,000, and, he said, for him the tax would cost £100 a quarter, and then, according to HANSARD, he went on with these words:
"Many people spend as much as that on an afternoon at Ascot."—[OFFICIAL REPORT, 23rd June 1966; Vol. 730, c. 1044.]
The recollection of the Press, of the B.B.C. and of this House is that he said something very different indeed. There are many examples of this in the Press. Perhaps I could quote from the Daily Express of Saturday. [HON. MEMBERS: "Oh."] This is headed:
"Ascot Row. Farmers Demand Callaghan Apology."
The Chancellor knows that he received a telegram from the President of the National Farmers' Union, protesting.
The discrepancy is quite easily explained. The HANSARD official note

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was altered by a Treasury official. [HON. MEMBERS: "Shame."] That note read:
"Many people of this kind",
That will be within the recollection of the House, and those words are similar to those which appeared in many reports in the Press. The Chancellor's official struck out the words "of this kind" and, therefore, turned it into a general gibe and not one directed at the farmers, as the House heard from the Chancellor last Thursday.
It then goes further than that—and again I quote—
"A Treasury spokesman tried to protect the Chancellor and claimed in a statement on Friday night that reports of Mr. Callaghan's speech on Thursday were inaccurate."
He quoted a sentence from HANSARD, a sentence which was altered by the official from the Treasury, and went on to say:
"I can see no implication at all that he is referring to farmers."
Nor, indeed, could I, if that had been what the Chancellor said.
Mr. William Hamilton: This is corny.
Mr. Macleod: I should like to ask the Chancellor of the Exchequer about this Treasury spokesman who tried to protect him.
Mr. William Hamilton: Kaldor?
Hon. Members: Oh.
Mr. Speaker: Order. We are on a serious issue—[HON. MEMBERS: "Hear, hear."]—even if it has political undertones. Mr. Macleod.
Mr. Iain Macleod: The alteration of the OFFICIAL REPORT is a serious matter, and it has always been treated as such. Naturally, the Chancellor will understand that the Press who report our proceedings naturally resent what has happened, because the implication would be that their reports, which are, in fact, now known to be accurate, were incompetent.
The farmers, as the Chancellor knows, were bitterly angry at what they thought he said, and they now know that, in fact, he did say.
So, having made it quite clear that the OFFICIAL REPORT was altered in a material particular, and that the alteration should not have been asked for by a responsible Minister of the Crown, I ask
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that an appropriate correction should be made and I invite the Chancellor to apologise to the House.
The Chancellor of the Exchequer (Mr. James Callaghan): Further to the point of order which the right hon. Gentleman has raised. HANSARD quotes my sentence as being:
"Many people spend as much as that on an afternoon at Ascot."—[OFFICIAL REPORT, 23rd June, 1966; Vol. 730, c. 1044.]
That sentence is incomplete. This has nothing to do with a Treasury official. The correction was made on my instructions—[HON. MEMBERS: "Oh."]—and I resent very much the right hon. Gentleman bringing a Treasury official into this. This is my responsibility and no one else's.—[HON. MEMBERS: "Resign."] In reply to that, I would use the old Biblical aphorism, "Let him who is without sin cast the first stone."
As far as I can make out, there are at least three versions of what I said on that afternoon, in the middle of a very hot debate. The Daily Telegraph has one, the Daily Express has another, and the B.B.C. has a third, I understand; but the facts are that I said, as HANSARD itself originally reported:
"Many people of this kind spend as much as that on an afternoon at Ascot."
I cut out the words "of this kind" because it seemed to me a slur on the farmers—[HON. MEMBERS: "Yes."]—and having made it in the heat of that debate I did not wish to immortalise it in the prose of HANSARD.
However, the right hon. Gentleman has got his way: the words will now appear; the slur on the farmers will be there—[HON. MEMBERS: "Whose fault?"]—because I may not take them back. I readily accept that I made the alteration. It will be within the judgment of the House whether they think that is a serious matter or not—[HON. MEMBERS: "It is."] Of course, it is wrong to alter HANSARD. We all know this. We all know it is never done—[Laughter.]—and I only say, if it has given deep offence to the party opposite, that I deeply regret that I struck those words out of HANSARD, and that I hope they get as much satisfaction as they can out of it.
Mr. Iain Macleod: Does the Chancellor realise he has made this matter

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much more serious by the statement he has made? He has admitted, first of all—this was my first point—that this was a slur. He has gone on to say that he himself asked that these words, spoken within the hearing of the Press and of the OFFICIAL REPORT, should be struck out. It is not within the competence of any Minister or any Member of this House to do such a thing—[Interruption.] No. It is not. HANSARD may not be altered in a material particular. This has been established for a very long time indeed, and the right hon. Gentleman now admits that he did this himself—instead of what I thought was the much more likely explanation, that an official, correcting the speech, had altered it—that he himself had given instructions to strike out what he admits to be a slur on the farming industry. That is a matter which we on this side of the House will have to consider very seriously indeed.
Mr. Sandys: On a point of order.
Mr. Shinwell: Further to the point of order. I am not raising the question of making a change in the HANSARD report. Of course, we all know it has been done frequently, even by Ministers and Prime Ministers—and if the House wants chapter and verse I will give it—[HON. MEMBERS: "DO."] Oh, no. I know a little more about these things than you do. My point of order is this——
Mr. Speaker: For the record, by "you" the right hon. Gentleman means the Opposition. The right hon. Gentleman was not referring to me.
Mr. Shinwell: The point of order that I am raising is this, and it will be on the record in HANSARD tomorrow morning—unless it is altered. The statement by the right hon. Member for Enfield, West (Mr. Iain Macleod) is as clear as can be that a Treasury official altered the statement in HANSARD. What I am asking is: is that not a very serious accusation against—[Interruption.]
Mr. Speaker: Order. I hope that right hon. and hon. Gentlemen will hear each other.
Mr. Shinwell: Is that not a serious accusation against a civil servant, and an
1244
unspecified accusation, which makes it very much worse, for which the right hon. Gentleman has made himself responsible, and should he not be called upon to withdraw at once?
Mr. Speaker: Order. The question whether a right hon. or hon. Gentleman makes a charge against a civil servant is not a point of order for me. It is a matter for an hon. Member's judgment and discretion.
Mr. Iain Macleod: Further to that point of order——
Mr. Speaker: Order. I would like to go further and deal with the general point of order which the right hon. Member for Enfield, West (Mr. Iain Macleod) has raised. I would remind the House—speaking of this like Agag, walking delicately, because I sinned myself once—that HANSARD is a full report in the first person which, though not strictly verbatim, is substantially a verbatim report, with repetitions and redundancies omitted and with obvious mistakes corrected, but which, on the other hand, leaves out nothing that adds to the meaning of a speech or illustrates an argument.
I am obliged to the right hon. Gentleman for doing me the courtesy of giving me notice this morning that he intended to raise this point. That has enabled me to make inquiries. I have examined the original transcript, and it is quite clear that the passage, as reported, read:
"Many people of this kind spend as much as that on an afternoon at Ascot".
As the House has observed, the Chancellor of the Exchequer has made exactly the same statement as to what was originally in the text. I understand that an alteration was suggested, leaving out the words "of this kind". That was accepted by the reporters, but, after discussion with the Editor of the OFFICIAL REPORT, both he and I are satisfied that it ought not to have been accepted by the reporters; and the passage, in its original purity, will appear in its original form in the Bound Volume.
Mr. Sandys: Further to the point of order, Mr. Speaker. Is this not really a very serious matter, and is it not unfortunate that the Chancellor of the

1245
Exchequer should try and make it a laughing matter—[Interruption.]
Mr. Speaker: Order.
Mr. C. Pannell: On a point of order, Mr. Speaker,
Mr. Speaker: Order. I am dealing with this one. I was not aware that the Chancellor of the Exchequer had made it a laughing matter.
Mr. Pannell: Mr. Speaker, you yourself have said that you have sinned in this matter in the past, I think for the very honourable reason that you were betrayed improperly into a solecism which you would not wish to stand on the record to the hurt of someone. There are plenty of precedents for what the Chancellor has done. What there is not an admission of is the degree of humbug from the other side in raising this matter.
Mr. Eldon Griffiths: Mr. Speaker, to put it in plain English, the Chancellor of the Exchequer has admitted faking the record. What protection do hon. Members or the public have from Ministers of the Crown who fake the record?
Mr. Callaghan: If I may give an answer, when a Minister of the Crown is accused of faking the record he immediately accepts responsibility for the words that were struck out. That is the best protection of the House, and that is what I have done. I did it for a good reason.
Mr. William Hamilton: Mr. Speaker, could you make it quite clear to the House that when a right hon. or hon. Member goes to the OFFICIAL REPORT and requests that something should be struck out, the decision whether or not to strike it out rests with HANSARD and not with the Member concerned? Do I get your explanation clear, Sir, that, in fact, the Editor of the OFFICIAL REPORT originally accepted my right hon. Friend's suggestion that these words be omitted? Could you say what further circumstances caused him to alter that original decision?
Mr. Speaker: No. I will not add anything more to what I have said actually happened. I am sure that the hon. Member for Fife, West (Mr. William Hamilton), on reflection, will agree with me and I hope that the House will agree with me, that, in the matter which
1246
is being raised, or, indeed, any other matter which is raised on the Floor of the House, we do not seek to criticise in any way the Parliamentary reporters who serve us so magnificently upstairs.
Mr. Iain Macleod: I would like to respond to the right hon. Member for Easington (Mr. Shinwell) straight away. I am not sure whether I have this right. The account that I gave to the House has been borne out exactly by what Mr. Speaker has said of his discussions with the Editor of HANSARD. [HON. MEMBERS: "No."] Yes, in every respect. If the Chancellor went upstairs himself, and altered it, which I am bound to say I find incredible, then, of course, I will amend my original statement to that; but I find it incredible. I had assumed that a Treasury official had altered it. Will the Chancellor tell us whether he went upstairs himself and altered it?
Mr. Callaghan: I see no reason for any secrecy about this. I asked the Treasury official to make the alteration. [HON. MEMBERS: "Oh."] The Treasury official—[Interruption.]
Mr. Speaker: Order. I want to hear the Chancellor.
Mr. Callaghan: The Treasury official concerned did it under my instructions, and I take full responsibility for it. What I objected to in the first place was the line taken that the Treasury official had tried to make these alterations. Anything done by him, or by anyone trying to protect me on the following day from the Press, I take full responsibility for. I would be glad if Treasury officials could be left out of it.
Mr. Evelyn King: As I understand, Sir, the Chancellor has offered one apology. May I ask him whether he will generously offer another for his preceding words, in which he refers to a farmer, whom he takes to be typical, with a turnover of £60,000 a year? Would he accept that the income——
Mr. Speaker: Order. We cannot debate last Thursday's debate again now.
Mr. Evelyn King: Mr. Speaker, you have already ruled as being in order one apology from the Chancellor in respect of these words. I would have

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thought that it was in order to ask him to further that apology. May I ask him whether he will accept that the majority of farmers work seven days a week and have never been within miles of Ascot in their lives, because they resent such statements?
Mr. Speaker: Order. As I suspected, we are now getting into the realms of political argument. It has nothing to do with this at the moment.
Mr. Sandys: Mr. Speaker, I would like your guidance. Immediately after the intervention that I made or the point of order that I raised a moment ago, the Prime Minister shouted across to me, and I took down his words—[Interruption.].
Mr. Speaker: Order. May I say, first, that I deprecate very much appealing to the Chair about words which are flung across the Chamber and which the Chair has been fortunate enough not to hear? But, in case there should be any misunderstanding, the right hon. Gentleman may tell me now.
Mr. Sandys: This is what the Prime Minister shouted across to me. [Laughter.] This is very serious, and other hon. Members heard it. He said, "You be careful what you say. We know too much." He then pointed to my right hon. Friends and myself. I suggest to you, Mr. Speaker, that that is not the way to behave and that the Prime Minister should not attempt to intimidate my right hon. and hon. Friends.
The Prune Minister (Mr. Harold Wilson): Further to that point of order. I should not, if the right hon. Gentleman got me down right, have said, "You should watch it", or whatever the words were, because I was not addressing myself to the Chair, as perhaps I should have been, when it would have been more correct to say, "The right hon. Gentleman should watch it". We certainly do not know too much.
I think that it has always been a matter for concern in the House when HANSARD has been altered in the sense as opposed to mere questions of grammar, punctuation, or anything that is not essential. This has always been a matter of concern.
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In view of the concern which has been expressed this afternoon, and remembering, as I do, the action of the then Leader of the Opposition in altering HANSARD in a fundamental sense on what he had said about sanctions against Rhodesia, and the fact that the corrected version in HANSARD which the House was not even told about was very different from the Press reports at the time, and was of fundamental importance, I should like now to consider with my right hon. Friends what action the House as a whole ought to take on this whole subject, including the question whether it should now be referred to the Select Committee on Procedure so that we can get clear Rulings on the changes that can be made in HANSARD, some of them without any opportunity of the House, whatever its recollection, or whatever the Press recollection, having a chance afterwards of querying the corrections made, as in the case to which I have referred.
Mr. Speaker: May I deal, first, with the point of order raised by the right hon. Member for Streatham (Mr. Sandys). In the words which he heard across the Floor there was nothing unparliamentary except the use of the second person pronoun.
Mr. Heath: Whereas my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) gave notice to you and to the Chancellor of the Exchequer that he would raise this subject at the earliest opportunity, the Prime Minister has now taken it on himself to raise another issue. I do not know to what he is referring, but he said, "the then Leader of the Opposition ", which is obviously a period many months old, without giving any notice to anybody who is supposed to be concerned with the matter.
Is it not the case that this is not in accordance with our Parliamentary traditions? Would it not be better to return to the matter which has been raised by my right hon. Friend, namely, that the Chancellor of the Exchequer instructed the record to be altered? The right hon. Gentleman said that this was the case, and he has given the reason why he did it, which was to remove a slur on the farmers of this country. He thereby admits that he made the slur in his speech, and ought not the matter to be finally closed by a complete apology from the Chancellor for so doing?
Mr. Speaker: The last point is not a matter for the Chair, but for the Chancellor. I think that we might now consider this matter closed, for today at any rate.
With regard to the point of order raised by the right hon. Member for Enfield, West (Mr. Iain Macleod), the Chancellor of the Exchequer confirmed, before I made my statement, the statement that I was going to make.
Mr. C. Pannell: Listen with mother.
Mr. Speaker: Order. I have said that the record is to be corrected. We have the Finance Bill ahead of us, and I think that we might now proceed to it.

ORDERS OF THE DAY

  FINANCE BILL
  Considered in Committee [Progress, 22nd June].
  [Sir ERIC FLETCHER in the Chair]

  FINANCE BILL

    Clause 42.—(SELECTIVE EMPLOYMENT TAX.)
    4.14 p.m.
    Mr. Laurence Pavitt: On a point of order. Sir Eric, on this Clause, you have selected nine Amendments for Division, and 35 Amendments which are to be discussed with them. Do we take it that we may not vote on any of these 35 Amendments?
    Secondly, as Amendment No. 34 deals with part-time employees, will it be possible to discuss with it Amendment No. 21, in page 48, line 23, leave out "twelve shillings and sixpence", and insert "eight shillings and fourpence"?
    The Chairman: The position is that in addition to the nine Amendments provisionally selected for debate, I have selected two further Amendments for debate, Nos. 231 and 325. When we come to the Amendments which are not selected, but which are to be discussed with the Amendments which have been selected, I am prepared to listen to any representations which may be made from either side of the Committee for separate and specific debates.
    In reply to the final point raised by the hon. Gentleman, Amendment No. 21 is not selected.
    Mr. Iain Macleod: Further to that point of order. In view of the large number of Amendments which are to be taken with Amendment No. 34, which, I appreciate, goes very wide, perhaps the Chair will consider sympathetically requests from this side of the Committee for separate divisions on some of the Amendments which are to be considered with it?
    The Chairman: As I said, I am prepared sympathetically to consider requests from either side of the Committee for separate Divisions on some of the Amendments which are to be discussed with Amendment No. 34.
    Mr. Iain Macleod: I beg to move Amendment No. 11, in page 48, line 13, to leave out "5th September 1966" and to insert "6th February 1967".
    I propose to speak fairly briefly on this important Amendment, although I hope to catch your eye later in the discussion. The Amendment would move from the first Monday in September to the first Monday in February next year the date set down at the beginning of the Clause.
    The first achievement of accepting the Amendment would be to buy time. This Clause is really the heart of the Chancellors Budget, and it seems a long time ago that the Chancellor was discussing hairdressing and the like in his television performance on the evening of Budget day. Since then, these proposals have been riddled. They were shot through on the Budget debate, and on the Second Reading of the Finance Bill, and what was left of them was shot out of the sky by my right hon. Friend the Leader of the Opposition in the debate last Thursday to which, in a very different context, I was just referring.
    We know perfectly well that fierce opposition comes from the Chancellor's own side of the House in this matter. There has scarcely been a speech supporting him and even the Minister of Labour found loathing struggling with loyalty as he tried to move the Second Reading of that Bill.
    The proposal which we now put will, in a sense, bring the two Bills together—that is, Clause 42 of the Finance Bill and the Bill which is not before the House, but which is in all our minds and in due course will be discussed. A number of concessions of one sort or another are beginning to be made, largely as a result of pressure from this side of the House—on agriculture, on clay mining, on charities, on sand. If we could push back the date it would be possible to argue some of these matters at rather more satisfactory length.
    I put forward two main reasons, The first is that unless we do something like this Amendment, then it is quite clear that we are heading for complete confusion. Ministers from the Treasury Bench, including the Minister of Labour, believe that comparatively few companies will be affected by these different provisions. I should like to illustrate the
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    position simply from one letter which I have received from the chairman of the British Oxygen Co. Ltd. The difficulty—and unless we can bring these two dates together and, therefore, the two Bills together we shall not solve it—is that we still do not know what the machinery for assessments or refunds will be. For example, the original White Paper referred to an "establishment." In the Budget debate the Financial Secretary said that it meant "premises" and he went on to quote the statistical reference to premises on which I made some comment. The Blue Book, which gives the different classifications, referred to a "unit" and on Second Reading, last Thursday, the Minister of Labour talked about the "address." We have four different conceptions—the establishment, the premises, the unit and the address. The simple fact is that nobody in industry knows which of these or which interpretation of these is the correct one.
    That is the first reason why we should seek, as far as we can, to bring these two Bills together. Let me refer to this letter from the chairman of the British Oxygen Company Ltd. to show the sort of thing that will happen unless we take further time, as we are suggesting, to hammer out some of these points. British Oxygen is a firm, like many others, which is widely scattered and widely diversified, sometimes with its sales and accounting departments concentrated and sometimes, where it is more efficient, with them linked with the manufacturing industry.
    The chairman gives four examples which will interest the Chancellor. If the Chancellor has not seen the letter, I should like him to study it afterwards. First of all, under the original White Paper British Oxygen reckoned that it would be in credit £250,000. Under the Bill it reckons that it will be in deficit £150,000. That is a difference of £400,000. The first example concerns one manufacturing site—and we do not know whether "site" is a fifth term of art to add to the four which I have given. On this site the company is planning automation. That will reduce the number of workers and will switch the plant. It would cost £40,000 per annum under the Chancellor's proposals, which can make no sense at all.
    Secondly, the company has special need of transport because of the vast number

    1253
    of its customers. Now, the only way in which it can meet the bill is to set up its own transport company and "to make it less efficient"—I am using its own words. If the company makes it less efficient it will gain £54,000. Thirdly, it centralises the accounting work by computer with one of the factories. There is a resultant saving of staff, but, as a result, the company reckons that it will have to pay out £51,000 a year instead of recovering £49,000—a turnover of £100,000 a year.
    Lastly, at one works where there is a large percentage of staff the company has precisely 64 staff and 64 workers, and if it adds one worker or discharges one clerk it will gain £10,000 a year. The chairman asks, "Does this make sense?" The answer is that of course it does not; it is absolutely daft. This is just one of the illustrations which have been flooding in to everyone of my hon. Friends and, I have no doubt, to hon. Members opposite.
    The first reason I give, then, why we should take time is that we should at least make some more sense of the absurdities of the Bill. At this point I will consider only the industrial absurdities of the Bill which are so manifest that unless the Chancellor is ready to take a little longer and to bring these two key dates together—the collection and the beginning of the refund—only chaos lies ahead for British industry.
    On previous Amendments I have been most conscious, in one or two instances almost morbidly conscious, of the cost of the Amendment. On this occasion I am bound to say that I am not. We have put forward from our side of the Committee ideas about a payroll tax linked to the development of the social services and with one eye on Europe. The Liberal Party has put forward, as expounded by the hon. Member for Cheadle (Dr. Winstanley), an extremely detailed plan. I would rather the Chancellor used either of those. I would far rather that he used the regulator than the naked folly of the S.E.T. as it stands before Parliament has had a chance properly to amend it.
    I turn briefly to the second main reason. It is the question of the interest-free loan which is implicit in the Chancellor's scheme and which would be eliminated if this proposal were adopted. I am glad to see the Joint Parliamentary
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    Secretary to the Ministry of Pensions and National Insurance present, because we want to know why it is impossible for administrative reasons—if that be the answer given—to collect these sums at a date nearer to the date on which refunds can become payable.
    May I quote briefly from a letter in The Times on 25th June which begins:
    "I find it quite incredible that 'for administrative reasons' the Government think it necessary to take interest-free loans from charities in the form of returnable selective employment tax. The charity has first to find the money out of gifts intended for badly needed relief—already usually inadequate—or else it must borrow, if it can, at interest."
    What is true of charities is true for every employer in this country. The charities will get a refund—after considerable pressure has been brought to bear on the Chancellor—but even the charities will have to make this five months' interest-free loan to the Government, and at least for those five months a good deal of work will be held back. We want the most detailed reasons why, administratively, these dates cannot be nearer.
    I turn from the situation of charities and allied problems to the much wider problem of industry. The question which we all want answered—and I must press for an answer again this afternoon—is, what will the Chancellor tell the banks about the level of bank advances and overdrafts in order to meet the interest-free loan which he is demanding from employers?
    We asked this question in detail when we were debating Clause 15, on the regulator. We asked it again a day or so later, when discussing a Clause in connection with Corporation Tax. My right hon. Friend the Leader of the Opposition stressed the point, as did a number of others, last Thursday on Second Reading of the Ministry of Labour Bill. The Chancellor avoided answering until, at 9.56 p.m., with less than five minutes to go, the Leader of the Opposition interrupted him, and then the Chancellor said that he had nothing to say on the subject. Thus, on three occasions at least—more if one counts the debates on the Budget—the right hon. Gentleman has been invited to answer this question and to make the matter clear.
    The Chancellor will recall that I said he had been "charmingly evasive ", but

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    that was two debates ago. We have come to the point now when it is not funny for him just to go on saying nothing about these matters, while industry and the banks have to wait. The point is fundamental to the Chancellor's Budget judgment. It is not possible to understand whether the Budget is inflationary, deflationary or neutral until we know exactly how much of this will be taken up by bank advances in overdrafts or how much will be found out of profits or in some other way.
    I appreciate that there are some questions which the Chancellor cannot answer, but he can say when he expects to make known the instructions which he must be intending to give—I am sure that he has already discussed this matter with the Governor and the banks—about the level of advances that will be allowed.
    I remind the Committee that, from the Chancellor's point of view, from 5th September the right hon. Gentleman will be taking nearly £100 million a month—perhaps a little under that, but not very much less—out of the economy. As winter rolls on—and, with luck, as we are getting towards the end of it; certainly some time either at the beginning of February or as soon after as practicable—the right hon. Gentleman will have to pay out about £300 million.
    I do not know whether it will be paid all at once, in a week or in one day, but the effect of that—of that tremendous punch being dealt in September and the enormous reflation that is planned for some time in February or towards the end of the winter—on the economy is very hard indeed to judge. I am sure that the right hon. Gentleman will agree with me about that.
    I therefore press the right hon. Gentleman on this issue. It is intolerable that industry should be treated so casually, because, for a variety of reasons, the Government were not ready with what we may call their Ministry of Labour proposals and, because of that, could not put them in the same Bill, so that the House of Commons has been denied the opportunity of discussing the collection and the refund of S.E.T. in the same set of debates. It would have been a great deal more convenient had that been possible.
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    I acknowledge that the Chancellor has done what he could in an unsatisfactory position to bring these closer together. But they are in different Bills and although the Chair may oast a blind eye from time to time it would not be in order to go into any detail about what is in the Ministry of Labour Bill or to say what we would wish to do to it today, apart from strangling it. So we must resort to these methods of putting down large-scale Amendments of this sort.
    To sum up, we believe that this is a thoroughly bad Clause. We believe that it has begotten a very bad Bill indeed. However, we have given a Second Reading to the Finance Bill and to the other Measure. It is, therefore, the task of the Committee to make this Bill a little less bad. I suggest that the right way to start is to move the two matters together and, by accepting the Amendment, we will have time to iron out some of the absurdities inherent in the scheme and it will also enable the interest free loan part of the Chancellor's scheme to be obliterated.
    I hope that the Committee will accept the Amendment.
    The Chancellor of the Exchequer (Mr. James Callaghan): It might be convenient to the Committee if I were to indicate my reaction to the Amendment now, and then the debate can go on in the knowledge of that.
    As the right hon. Member for Enfield, West (Mr. Iain Macleod) said, the effect of the Amendment would be to defer the starting date for collection of the tax from 5th September next to 6th February, 1967. The date 5th September was chosen as the earliest practicable date for the start of the scheme, given the need to pass the necessary legislation and to prepare and adapt the administrative machinery. I understand from the right hon. Gentleman that the Amendment is designed to delay collection of the tax until it is closer to the time when payments of refund or premium can be made.
    As the right hon. Member for Enfield, West recognises, the net yield of revenue from the tax would be very much affected by the Amendment. Whereas I anticipate in 1966–67 a net revenue of about

    1257
    £315 million, according to the best calculations that can be made, if the Amendment were accepted the product of the tax would be only about £110 million. That is a very substantial difference. The effect of the Amendment would be to reduce the estimated revenue by about £200 million.
    I do not think that I could recommend the Committee to delay the collection of the tax for five months because, as I have indicated, from my Budget speech onwards, it is intended to have a disinflationary effect. I said that in response to the enthusiasms, as I called them, of the hon. Member for Worthing (Mr. Higgins) the other night, and I said it in my Budget speech. It is my understanding of the economic situation that, uncorrected, there would be an upsurge of demand in the autumn, so far as one can judge. And, therefore, I would certainly not want to see the Revenue deprived of about £200 million in the way proposed in the Amendment.
    The right hon. Member for Enfield, West said that he would, in those circumstances, use the regulator or, I imagine, would use any other combination to secure his ends. I do not believe that it would be appropriate—and this is a measure of the difference between us—to make a deep incision into particular sections of industry on a narrow front through imposing increased Purchase Tax in this way. It is much better to have a smaller tax over a wider front. The disinflationary effect of this will be spread over a wider sector, but will be very much less deep than would be the operation of the other measures which I might have chosen. I believe that to be right because of the particular nature of the industries upon which a very heavy additional load of tax would bear this year. I would, therefore, prefer not to use the measures put forward by the right hon. Gentleman.
    I recognise that there is a difference of view about this. If we were to use the regulator I think that the decline in the yield—not an absolute decline, but a decline in the rate of increase in the yield—from beer, spirits and tobacco might be accentuated. The yield is going up, but it is not nearly as steep as it has been. That is another reason for not, at the moment, hitting that particular group hard.
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    The right hon. Gentleman said that we could argue at greater length if the time of collection were delayed. I think not, with respect. The Bills are going through now. We are at Clause 42 of this Bill. A number of points which the right hon. Gentleman raised, particularly about British Oxygen, are not concerned so directly with payment of the tax. I agree that it affects its attitude from the point of view of whether or not it will pay. However, it is more concerned with repayment.
    I hope that the right hon. Gentleman will not stick to the idea of strangling the Ministry of Labour Bill, because that will look after the refunds. [HON. MEMBERS: "Strangle this one."] I detected that the right hon. Member for Enfield, West was in a murderous mood earlier. Whichever one he wants to strangle, whether it is one or both, discussions are going on. Frankly, it would not give us any longer to argue about them. I have not seen the British Oxygen case; I do not think that I have seen the letter. I saw the article in the Financial Times, and inquired into it, but I cannot say what the results of that inquiry were.
    As to interest-free loans——
    4.30 p.m.
    Mr. Iain Macleod: Before he leaves that point, I wonder whether the Chancellor would consider at a later stage inviting the Parliamentary Secretary to the Ministry of Pensions and National Insurance to intervene, because he will realise that if, for example, either the collecting date could be altered for administrative reasons, or the refunds could be made more quickly, that would be an alternative way of going some distance to meeting the case which I have put to the Committee.
    Mr. Callaghan: I am sure that if my hon. Friend wishes to intervene he will do so. He is an entirely free agent in this matter. The House is in Committee. But I think that I can tell the right hon. Gentleman that my hon. Friend and I speak as one on this issue. We have been into it very carefully. The 5th September was the earliest date at which we could introduce the machinery. My hon. Friend is not in a position to comment on the repayments. That is for

    1259
    the Ministry of Labour. We have been very carefully into it; I ask the right hon. Gentleman to accept what I said on it.
    On interest-free loans collection must precede repayment and there is bound to be an interval. It is rather longer in the first instance than in the succeeding periods of three months. The right hon. Gentleman pressed me, as he said for the fourth time, to say what I am to tell the banks. I have no additional answer to give him than I have given up to the moment. This is a matter of discussion. As the right hon. Gentleman correctly foresaw, discussions are going on about it.
    I have taken the temperature of a number of industrial firms concerned. I find that a number of them, in the weeks to come, will be wanting to know what overdrafts they can expect when they are financing themselves some way ahead. It is beginning to be a problem, but it is not yet a problem. That is the best advice I can get——
    Mr. F. A. Burden Mr. F. A. Burden (Gillingham) rose——
    Mr. Callaghan: The hon. Member will have an opportunity of speaking in the debate.
    I think that it is far better to take the necessary time and to get as close as possible to the incidence of the tax before we give the guidance which industrial firms, naturally, feel they want to have. Now if the hon. Member for Gillingham (Mr. Burden) wants to intervene, I will give way.
    Mr. Burden: Surely the right hon. Gentleman realises that many firms have to make heavy overdraft arrangements and that any interference with this, although they may plan now, will create difficulty. Will the Chancellor, therefore, give an undertaking that he will certainly not instruct the banks to tighten up on overdrafts during the very difficult first few months of this operation?
    Mr. Callaghan: I thought that was the point I was dealing with. I am not ready at the moment to give any undertaking on this particular matter. [HON. MEMBERS: "Why?"] Because I want the tax to have a disinflationary effect.
    1260
    I have now said so about six times. I understand that a great many hon. Members opposite think that it should have a disinflationary effect. [HON. MEMBERS: "Not everyone."] I did not say "everyone "; I said "a great many".
    As to the future, regular records are kept of bank deposits and advances. We have just had the latest figures. The banks are not pressing quite so hard on the ceiling of advances as they were. Deposits are up, but seasonally corrected there is little difference. It would not be right in the general interests of the economy at this particular moment to say what should be the appropriate level of bank advances given in the month of September or October. It would be defeating part of the object of economic management if I were to do so.
    Mr. John Biffen: Could the Chancellor say whether, in making this assessment, does he or does he not take account of the fact that an increase in the strain on company liquidity as a result of having to pay the initial stages of the Selective Employment Tax is likely to have some considerable effect on the ability and willingness of companies to continue manfacturing investment? Is not one of the consequences likely to flow from this decision that the restraint will come not on consumption, but on investment?
    Mr. Callaghan: This, of course, is one of the factors I have very much in mind. The banks have been given instructions—which have been publicised, and the Committee knows about them—for a long period now of the order of priorities in which advances are to be made, because it is, naturally, my strong desire that investment should be kept up. I have consistently taken the line in the matter of advances that consumption comes much lower in the scale of priorities than does investment, and exports come right at the top.
    I ask the Committee to accept that as soon as I formulate the advice which I think is reasonable and rational, and based on a proper assessment of the future, that advice will be passed on to the banks. They will be given it. We are not at arm's length. The Committee can take it that there is a movement of opinion between various organs of government and the banking world and that

    1261
    as soon as it is possible to make an assessment of the situation it will be made and the information will be given. But I repeat that there is no intention here to turn on the tap so full that it would offset all the effects of the measures I am trying to take.
    I am sure that that is clearly understood. This is part of the object of the exercise and the reason I chose this method rather than to make that deep incision into part of the industrial body which otherwise one would have to make. I hope that the Committee will be willing to accept that as a sensible and proper approach to this problem, knowing that as soon as it is possible to give this guidance it will be given, and recognising that although some individual firms, I have no doubt, already want to know, I am advised on very good authority that this has not so far become an immediately pressing problem for the banks.
    Mr. John Boyd-Carpenter: I find the right hon. Gentleman's justification of the five months' delay between the imposition of this tax and the first repayments very disquieting indeed. The right hon. Gentleman said bluntly, adopting the argument which Chancellors of the Exchequer have adopted since Goschen, "I must have my money." In this case, he must have £200 million. What he said which alarmed me a great deal more was in reference to the disinflationary effect of this tax and of his wish that bank advances should not be sufficient to improve the liquidity of industry for the purpose of bearing this tax in full. It seems that what the right hon. Gentleman is trying to do is to have a disinflationary effect by a tax aimed not at consumption—it hardly touches consumption—but at the working capital of industry.
    This is where the Chancellor has now told the Committee he desires his squeeze to operate. This is the explanation for this timing. I cannot believe that the Chancellor seriously thinks that this, in this country's present economic position, is the right way to proceed. When production is as near stagnant as makes no difference, to apply the squeeze quite deliberately to the working capital of industry is an appalling mismanagement of our affairs. The Chancellor says that it is unfortunate that it is not possible to make these repayments until February, but that
    1262
    it is necessary for the purposes of his economic policy to impose the tax in September.
    Mr. Callaghan: There is one point which I would be glad if the right hon. Gentleman would correct. It is not true that production is stagnant. The output of engineering and allied industries rose by 4 per cent. between the first quarter of 1965 and the first quarter of 1966.
    Mr. Boyd-Carpenter: I am glad to hear any words of comfort from the Chancellor. I do not think that he will dispute that the general index of production has moved about one point. I do not think that he would pretend for one moment that he is satisfied with a state of affairs which compares so adversely with the position which he inherited, when industrial production was rising steadily.
    Mr. Callaghan: Industrial production went up by 1 per cent. between the fourth quarter of 1965 and the first quarter of 1966 which, if it continues—who knows?—is 4 per cent. per annum. That is the rate at which it is going at the moment.
    Mr. Boyd-Carpenter: I am sure that the Committee will have noted the fairly considerable qualification—"if it continues".
    It is not my purpose to make out the position as any worse than it is. The facts are bad enough, as the Chancellor knows and as the First Secretary of State is frank enough to admit again and again. In a situation in which the failure of the economy and of production to expand must and does concern every responsible person in this Committee and outside, it is the economics of lunacy to apply the squeeze to the working capital of industry and to do it because the Chancellor has selected for his own choice a particular method of obtaining the yield which does not allow the compensating repayments to be made for five months.
    This is what the Chancellor has now told the Committee he is doing. I challenge it, first, on his own basis for it, namely, the way it will help our economy. I suggest to the Committee that it is disastrous for industry to proceed in this way.
    The right hon. Gentleman says that he will not say what instructions will be given to the banks. Does he realise

    1263
    the anxiety he is causing those in charge of industry? We are talking about a date only two and a half months away now. Does the Chancellor think that great companies do not worry about their liquidity two and a half months ahead? Does the Chancellor appreciate that, with this additional uncertainty piled on top of all the others which have to be faced by those in charge of industry, there will be a tendency for great enterprises to slow down, a tendency to wait and to hold up development? There must be this tendency if liquidity is to be in an uncertain state at a date which, from the point of view of the management of a great industry, is very close ahead indeed.
    This is an unnecessary anxiety. It will not be diminished by what the Chancellor said a few moments ago, in reply to my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod), namely, that, whatever happens, he did not intend the advances to be sufficient to offset the payment of the tax during these five months. Therefore, the need for the Chancellor urgently to let industrialists know how they stand must be increased by what he himself told the Committee this afternoon.
    These dates and the five-months' gap involve the grant of an interest-free loan to the Chancellor by almost everybody. It includes those in industry about whom I have been talking and whom this tax is supposed to be designed to help. It includes everybody else. It includes those categories to whom the Chancellor, with a little persuasion from both sides of the Committee, has agreed to grant repayment.
    Does the Chancellor realise the difficulty in which he is putting small charities by asking them to make an advance of this kind for five months? I know that from the angle of the Treasury the figures affecting small charities are very small. However, if the Chancellor had had experience of running a small charity which exists from hand to mouth he would realise that asking a small charity to make an interest-free loan of this description is a very serious matter.
    4.45 p.m.
    The Chancellor has accepted the principle that charities should not suffer. He
    1264
    should apply that principle to this five-month period as well. I do not suppose that this imposition will cause many charities to close, though it will cause some to close, but it will put all of them, big and small alike, in a difficulty. If the Chancellor accepts the principle that charities should not be harmed by this tax, he should apply the principle in this respect, also.
    Finally, may I take up the point made by my right hon. Friend and which the Chancellor did not deal with very well, to the effect that the acceptance of the Amendment would give us all more time in which to consider the manifold anomalies of this Bill and of the Ministry of Labour Bill. The Chancellor said—it is true, for obvious and constitutional reasons—that the Finance Bill has to go ahead on the ordinary timetable. The Ministry of Labour Bill has not. If we had a little more time to iron out the anomalies—the right hon. Gentleman does not dispute for a moment that they still exist—as to who should be entitled to repayment, I am sure that we could make this at any rate less of a hash job than it is at present.
    The Chancellor prides himself on having invented a new tax—one with which his name will no doubt be associated in the future. Surely he of all people should want to get it—not right; that is impossible—but less blatantly wrong than it is at the moment. If the Chancellor wants this to be a tax which will last, as he claimed during his Budget speech, a few more months spent on trying to get the categories right in the Ministry of Labour Bill would be time well spent from his point of view.
    If it is really urgent to get this £200 million this autumn, the regulator lies to the right hon. Gentleman's hand. If the economy is not in so precarious a position that a few months will not make a decisive difference, why not postpone the levying of this tax until February when it can be repaid, save industry from a tax on working capital, save charities from a forced loan, save the industries he is trying to help from a forced loan, and let the House of Commons get on with the business of trying to clear up this mess?
    Mr. J. Grimond: The Chancellor has told us that, in spite of the efforts he has made to take

    1265
    money out of the economy, in spite of a very high rate of taxation, and in spite of historically a very high interest rate, he expects a situation in the autumn when it will be necessary to take even more money out of the economy and that, therefore, he must resist the Amendment.
    What the Chancellor is, in fact, doing is taking money out of the economy from the pockets of people who, in the general interest, should not pay it. Therefore, I do not quite follow the right hon. Gentleman's argument that it would be wholly unfair to make what he called a deep incision into certain parts of the economy while leaving others free from it, because he is to make an incision into certain parts of the economy. He is to make an incision into parts of the economy which, in the long run, he admits should not and could not pay the tax.
    It is not the fault of the Committee if the Chancellor has had to come to the House of Commons without the full implications of this tax having been fully thought out. He could well have delayed the tax until more work had been done upon it; or he could have considered the many variations of payroll tax which have been constantly discussed by economists and businessmen over the years; or he could have taken up one or two of the concrete suggestions made from this side of the Chamber.
    For instance, my party has put forward a variety of payroll tax which would get the Chancellor all his money, but which would avoid many of the most serious defects of this tax and which, in particular, would leave Scotland, Wales and the North and West of England free from the tax altogether.
    Further, it must be reiterated that this is a tax which will fall with particular severity on areas like the north of Scotland and Wales, because there is no chance in those areas that there will be a change from service to manufacturing industry. The only change which can take place in that direction is by further depopulation. In general, throughout the discussions on this tax I have been in some doubt as to how the Chancellor expects it to work in the autumn—whether he expects it to work in a deflationary way by putting up prices or by achieving a redistribution of industry, which seems unlikely so soon, although
    1266
    I admit that in the long run it may have that effect. Therefore, we cannot be debarred from disputing these dates merely by the asseveration of the Chancellor that he must have more money in the autumn and not wait till the winter.
    I should like to take up two points which have been made. I do not want to go again over the ground which has been covered by the right hon. Member for Enfield, West (Mr. Iain Macleod), about the uncertainty which exists in large industrial companies, as to whether they will be liable for this tax or alternatively to a refund. Doubt does exist, and I believe that most of us have received representations from large companies, and it is a serious matter for the economy.
    I want to say a word about the similar uncertainty in many small businesses. There is the position of the local bakehouse. There is the position of the small knitwear or weaving business which also has a shop. None of these know how they will stand under this tax. These are not rich people and they cannot afford to be made guinea-pigs by the Chancellor, because the end of the experiment may well result in their death. Therefore, in supporting the Amendment, I believe that we should be given more time for discussion as to how the tax will work out.
    I turn to the forced loan aspect, and here again I do not want to cover the general ground, but I want to say a word or two about farmers and crofters. The Chancellor is well aware that not all farmers have a £60,000 annual turnover. Many farmers are already in debt and credit is tight. They are bound to be in some difficulty in finding even small amounts which they may have to find by way of loan to the Exchequer.
    I believe that in his discussions with the banks and in his further consideration of the credit position he should bear seriously in mind that in certain parts of the country there is a large volume of agricultural debt. Further, the right hon. Gentleman has said that this is a simple tax to collect, and from the Revenue point of view this may be true, but simplicity has been partly achieved by throwing a great deal of the burden of collection on to the people who pay the tax. This is a tendency which is growing all the time, and we should not delude ourselves that this way of collecting tax and then

    1267
    paying it back is, whether we take the position of the taxpayer or the Revenue, a simple or desirable matter.
    There are certain difficulties which will affect those areas of the country which are particularly hit by the present strike. In my constituency and in other islands off the coast of Scotland people have been forced to run up very large overdrafts because they had not been able to trade. We have been virtually blockaded for some six weeks. The Chancellor is sympathetic to us, I know, but I ask him to consider the case of a motor salesman in my islands who is carrying, on an overdraft, machinery for farmers. He is not able to move this machinery. Take any business which has goods held up in the ports in the South. All this sort of thing means that these traders' overdrafts are mounting.
    The farmer is in the same position. Farmers have not been able to sell their beasts. There are 1,000 sheep waiting to leave Orkney. I hope that the right hon. Gentleman will look at this problem sympathetically. I know that he would not like to add to the difficulties of these people who are not rich and who have no great amount of capital behind them. I am certain that in the working out of this tax he does not want to put people in an intolerable position which would endanger small farmers unless some amelioration were given in the form of levy.
    Mr. Charles Fletcher-Cooke: We know from the Chancellor's speech that he reckons to get £100 million a month, roughly speaking, from this tax. That means that he is to get between £500 million and £600 million before any repayments begin. The first thing to notice about that figure, which I think is right, is that this is not needed for the Chancellor's housekeeping budget at all. He has a surplus on his Budget as it stands without the Selective Employment Tax. Therefore, the only purpose of this tax is deflation.
    The second thing I want to say about this figure is that it is in its immediate impact a very different and much larger measure of deflation than the Chancellor indicated in his Budget speech when he gave a net figure for a full year of something like £200 million to £300 million
    1268
    as the additional taxation that he was taking out of the economy for the year for which he was budgeting. In other words, he is giving the most tremendous sock in the jaw for five to six months between September and March.
    It amazes me that the Chancellor is so confident of his assessment of the accuracy of his prophecy that he is prepared to deliver what is really a most damaging blow if he turns out to be wrong. I could understand, though I do not agree with it, the taking out of an additional £200 million to £300 million over the course of 12 months—a gradual and even process of that sort. I say that I do not agree, because when I spoke in the Budget debates I disagreed—I think I was perhaps alone in this—with the overall assessment of what was needed to be taken out of the economy. I have for many years disagreed with what is sometimes referred to as Boyle's law, which previous Governments of all complexions have adopted, because I have always thought that taking taxation for this purpose as opposed to purely budgetary purposes is in the end more inflationary than not.
    Mr. Biffen: Hear, hear.
    Mr. Fletcher-Cooke: However, that is something which I do not wish to pursue now; nor would it be in order to do so, though I am glad to have the support of my hon. Friend the Member for Oswestry (Mr. Biffen).
    Whether that is right or wrong, what surely must be wrong is if the Chancellor decides for the purposes of Boyle's law that it is necessary to take £200 million or so over 12 months by taxation out of the economy for the purposes of deflation. It must be wrong to put in a withdrawal of purchasing power to the level of £500 million to £600 million in the course of five months. That is a process which cannot be squared with the final objective because during those five months, if the reasoning of the final objective is valid, it must inevitably lead to enormous damage.
    Mr. Raymond Gower: My hon. Friend refers to Boyle's law. Would not he agree that there is also a little of MacDermot's law in this, too? If one tax is high, the other must be high as well.
    Mr. Fletcher-Cooke: Certainly, one can get all sorts of variations of the philosophy of taxation and all sorts of false egalitarianism of the type to which my hon. Friend refers. But that was not the point that I was dealing with. My point was that it seemed to me that the Chancellor's principle and objective of withdrawing £200 million or £250 million by additional taxation from purchasing power is contradicted by the method by which he is doing it, because he is doing far more.
    I do not understand why the right hon. Gentleman cannot synchronise the dates between collection and repayment, because that would achieve his objective. Admittedly, it might delay slightly the start of payment. But, if he were to synchronise the dates, or make them not five months but one month apart, he would achieve, a smooth withdrawal at the rate of £200 million to £250 million a year.
    5.0 p.m.
    I beg the Chancellor to consider the economic aspects as opposed to the administrative aspects of what he is doing. Not only is it economically damaging, but it is quite inequitable to take this loan without paying interest. Nothing I have heard from the Chancellor so far has explained why, if he must do this for administrative reasons, if there must be this enormous gap, he cannot pay some reasonable rate of interest to those whose money he is taking only to pay it back later. Then the whole problem of bank loans, and so on, would be less oppressive than it is now. If people know that they will be paid interest on what they have to pay by way of forced loan, then, when they get their accommodation from the bank, it is not quite so inequitable.
    My right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) referred in impassioned terms to the large firms which have to make their decisions way ahead. But, of course, it is the small firms which are much more likely to be hit. In my experience a large firm can always get by; it can always sell an asset of some sort, at a pinch. It does not go out of business as a result. But many small firms may do so as a result of this.
    I feel particularly bitter at the moment because I have had an intimation from
    1270
    the laundry which has served me well for five years that it is going out of business next week, partly as a result of this tax. I think that it will be extremely difficult to find another, so the smell in the "No." Lobby as the summer wears on may become rather great. But it is firms of that kind, whether or not they are likely to get the tax back, which will be hit. If the Chancellor insists on the width of the division between payment and repayment—not that the laundry will ever get repayment, though other small firms might be helped—he ought, in justice, to consider some form of interest payment on the money of which he will have the use. He would also help to smooth out the enormous escarpment which the five months' division creates, this enormous gap between the withdrawing of purchasing power of £500 million to £600 million and then starting to pump it back again in February.
    I marvel at the Chancellor's confidence that he is estimating the rise and fall of the economic tide in the months ahead with such accuracy.
    Mr. Leslie Hale: It was said in 1915 that there was rejoicing on the Rive Gauche when the French forces were issued with dungarees because it brought the world war within the limited range of Vuillard's colour. I had thought that Clause 42 had finally brought this year's Finance Bill within my limited economic range, until I heard two or three of the speeches to which we have just listened. Of the speech of the hon. and learned Member for Darwen (Mr. Fletcher-Cooke) one could say, as was said of one company report, of the broadcaster, John Tilley, that it was correct in every detail except the figures. It seemed to me that all his figures were wrong, though I do not think that his speech was any the worse for that, and with some of the points he made I have some sympathy.
    No one wishes to be discourteous to the Chancellor. He is the most courteous of men. Today, he has even apologised to the House for something which I have done once every three months since I have been here, that is, modifying a little overstatement which I thought, on the whole, would be better so modified. I never knew that there was any objection.

    1271
    If the hon. and learned Member for Darwen is worried about his laundry, he must have observed that the washing of dirty linen now seems practicable within the precincts of this Chamber.
    As I say, I hope that the Chancellor will not think that I am being discourteous. He is the last person I should wish to be thought discourteous to. He is one of the three triumvirs who wears his laurels with conspicuous modesty, one might almost say pudently, like a fig leaf. When I saw him leaving the House in the early hours of the morning a few days ago, bare-headed, taking the long trek to Downing Street on foot, I recalled Gray's "Elegy" with genuine emotion.
    I understand the real difficulty of any Chancellor. As "Nye" Bevan used to say, we must first establish the principle. The principle here, of course, is that all taxation is wrong. The principle is that taxation is undesirable, that its end should not be pursued if it can be avoided, and that it can be justified only by the necessity to raise money for some good and useful purpose. Whether the prevention of inflation by the reduction of expenditure at one end and the increase of it at another is really a useful purpose is too wide an economic question for us to develop at this moment.
    In introducing a new tax, even if the idea was not new, the Chancellor is under the obvious limitation that, if he makes the full inquiries which are necessary into its incidence the facts will leak out and action may be taken which would be subject to criticism. If he does not make full inquiries, he must produce it, perhaps, without all the detailed information as to its effects which are now becoming apparent and are giving us a certain amount of anxiety.
    The Chairman: Order. I hope that the hon. Gentleman will keep in mind that we are discussing an Amendment to change the date in line 13.
    Mr. Hale: Yes, Sir Eric. I was anticipating the moment when we would have to face that problem.
    May I point out that the Amendment, if carried, would provide that the Oldham Co-operative Society would benefit by
    1272
    £10,000, because the society would be exempted from the rather punitive payment of a tax six months in advance. While I share your desire that we should inhibit ourselves as much as possible, and not go too wide—I had just acknowledged that—there are matters raised by the Amendment which, perhaps, one might just as usefully deal with now instead of by dividing one's speech into half a dozen parts, dealing with the matter on various Amendments and on the Question "That the Clause stand part of the Bill". Indeed, my rising to my feet was almost an unpremeditated act at this stage, prompted by the knowledge that there are other engagements in the course of the day.
    I recall very well what my right hon. Friend said in his Budget speech, a speech which was universally applauded. No Budget speech has ever had so astonishing a reception. Some of my hon. Friends came out of the Chamber saying that they had literally seen the serpent emerging from the Dispatch Box and swaying to the cadence of the Chancellor's voice. 1 heard of one Parliamentary Private Secretary who threw up the endless rope and disappeared through the roof in ecstatic admiration. Perhaps I was one of the few at that moment who expressed modest reserve.
    But, after all, if the Chancellor, in his friendly converse, had suggested to his auditors that, instead of letting I.C.I. pay for the arts, he would let the arts pay for I.C.I., the whole occasion might have caused a little tepid surprise. One could imagine that, when it became apparent that this was intended as a serious suggestion, the Queen's Messenger might have dropped the dispatch box and dashed down to the harbour to see whether the boat was tied up.
    If he had gone one stage further and said, "Let us cream off the" divvy "from the Oldham Industrial Co-operative Society to make a contribution to help Sebastien out of his difficulties", then, I feel, the message would immediately have gone out for "Corkscrew Charlie". It might have been as well. We all know that such a call would receive a response, and might have led to the gentle suggestion that the Chancellor should do some quiet boating downstream on some quiet river, not the Danube or the Potomac, which are evocative, but somewhere

    1273
    limpid like the Limpopo or the Black-water near Macgillicuddy's Reeks. But there it is, the Chancellor has made his proposal, and we face this difficulty.
    The Chancellor has won a very great deal of confidence in the country, and I do not suggest that any hon. Gentleman opposite should crack little jokes about the situation left by the Tory Government when my right hon. Friend became Chancellor of the Exchequer. The situation was all the more difficult because it had been left until the time of a General Election. My right hon. Friend had to take traditional measures, and he took strong and forceful traditional measures, because that is the only thing open to any Government immediately after a General Election. That was the first problem that faced my right hon. Friend, and I think that he has earned the confidence of the country.
    I should be the last person to try to say anything that would denigrate my right hon. Friend, but I am worried about one thing. It has been said that there is another Amendment to be selected later which deals with a whole variety of exceptions. The main problem, it seems to me, is as follows. One says that there are too many people in service industries and that this is a useful measure in that one important object of it—though this is not its primary object—is to facilitate a redistribution of labour. But this forgets some promises by the Government about equal pay. What happens to the cause of equal pay when we have introduced a tax which, in essence, subsidises the employer of female labour at the expense of the employer of male labour? What happens to the cause of equal pay? How long will that be postponed?
    It is said that the levy is one for the period of five months and it will ultimately be repaid. Immediately after the Budget I was discussing it privately with someone intimately connected with nationalised industries who pointed out that the National Coal Board would be levied about £20 million in the five months. I understand that that is a problem which is receiving the Chancellor's attention. Otherwise, we shall have a nationalised industry which has to borrow, and borrow with Government guarantees in order to pay the money to the Government. One can get that in
    1274
    these days of restricted credit in other industries. It is a problem.
    The Oldham Industrial Co-operative Society—if I might for a moment talk for the attention of the Chancellor and not for the attention of the Opposition—pledged its full support for me as recently as six or seven weeks ago and gave it during the election campaign. It is a hard reward for it to be told that it is to be faced with having to pay £40,000 a year under this new tax. It is one of the great co-operative societies, with a great record of public service. It provides the public meeting place in Oldham. It provides an excellent cafe at which meals are available at about one-third of the price of other establishments. It has never asked for any special attention, and it is only fair to it to say that I approached it over this matter—it did not approach me—because I was concerned about the way in which the tax would affect it.
    There are many other institutions which the Chancellor has tried to meet. I accept that when he introduces a Budget he will have in mind that some exceptions will have to be made and that he does not announce them in the Budget speech. The right hon. Member for Enfield, West (Mr. Iain Macleod) was taking some credit for action about charities, which I have no doubt the Chancellor had in mind. I hope that we shall have an opportunity to consider in some detail in the Committee stage of the Ministry of Labour Bill some of the very specialised cases which will arise. I am thinking of institutions such as the London Library, which do not qualify as charities but do not make any profit and never have made any profit and have rendered massive public service but have been peculiarly the victims of successive legislation by the House of Commons over the last 10 years. They have already been deprived of income, and now are to be deprived of more——
    The Deputy Chairman (Mr. Sydney Irving): Order. I am very reluctant to interrupt the hon. Gentleman, but I must bring him back to the question before the Committee, which is the date.
    Mr. Hale: It is kind of you, Mr. Irving, to say that you are reluctant to interrupt me. I was just calling myself to order and saying that these were

    1275
    matters that we could raise later, so I will not raise them now.
    We have had the experience of the post-war credits. It was an ingenious idea at the time to say that we would levy money from people and pay it back later. It was a sort of Kathleen Mavour-neen principle—it might be for years and it might be for ever. I cannot complain. I have qualified for mine and have had them. There was not much in it, because I was in the Army at the time, but I got them back, and so I cannot charge the Government with malfeasance. But it has been a hard and long row to hoe, and this may be a hard and long row.
    While I congratulate the Chancellor and pledge my support, with some reservations, to the Budget, I thought it appropriate to raise one or two doubts that are in my mind.
    5.15 p.m.
    Mr. John Peyton: I am particularly glad to be able to speak now, because I want to refer to the way in which the Committee was rent with the sobs extracted by the hon. Member for Oldham, West (Mr. Hale) when he told us of the way in which the Oldham Cooperative Society had been severely punished for its very minor offence of having supported him at the recent General Election. There are some hon. Members opposite the support of whom one would regard as a very major offence, but in the case of the hon. Member it is the clearest peccadillo that the Oldham Co-operative Society has been guilty of I am sure that the Chancellor should be deeply ashamed of himself for having imposed such a terrible penalty for so small a crime.
    I want to be very bold and go back to a matter as near to the subject under discussions as the Chancellor's speech. The right hon. Gentleman said "We want to get as close as possible to the incidence of the tax before we give advice." There are two points that I want to make. First, this is no way to treat the House of Commons. The Committee is concerned with the business of passing very heavy taxation measures. Here, particularly, we have a new measure, and we are asked to pass it without knowing at all what is in the Government's mind.
    1276
    For the Government to say that they do not know at this moment what advice they will give to the banks in the operation of the new tax only a few weeks ahead is rather like someone saying "I am going to produce a new motor car, and it will be on the stand at the Motor Show, but I am not yet quite clear in my mind what fuel it will use." In other words, we are being asked to approve a method of tax the real guts of which have not yet been revealed or explained. This is a very important point for industry. Until this great uncertainty is cleared up industry will be in very great difficulty. So the first point that I make is that the Chancellor is treating the House of Commons very badly.
    The second point is much more serious, in my view. The Chancellor is treating industry in an experimental fashion. There have been various statements from Treasury spokesmen since the tax was first adumbrated to the effect that over the years the tax will be refined in the light of experience. In other words, industry, charities and a whole lot of small businesses will be used as guinea pigs and will suffer so that the Chancellor and the Government may learn.
    I believe that the mere fact that a tax is relatively easy to collect administratively is not necessarily the best yardstick of merit. I support what was said by my right hon. Friend about the merits of postponing the incidence of this taxation until we have had more opportunity for discussion and the Government have had more opportunity for revealing what is in their mind on this subject. I object to the attitude, "We have this crude idea. Let us impose it on industry and see how it works. It will all come out in the wash."
    Mr. Callaghan: Why does the hon. Gentleman think that the tax has anything to do with the level of bank advances? This is an entirely separate matter that must be judged against the wider economic canvas. It has nothing to do with the tax as a tax. It will depend entirely upon how the economic situation is looking at the time.
    Mr. Peyton: The tax is to be levied on the working capital of industry, as my right hon. Friend the Member for King-ston-upon-Thames (Mr. Boyd-Carpenter)

    1277
    has said. I am astonished by the Chancellor's intervention. It is not a point in his favour. However, he has saved me the trouble of extending my speech beyond a certain point and thus saved the Committee the pain of listening to it. The misunderstanding, if there is one, is that of the Government, and the Chancellor has underlined it by his intervention.
    This compulsory levy is to be taken out of the working capital of industry. It might be deflationary from one point of view, but what use is to be made of the money? Let there be no mistake; the Government will use the money at full tilt. It will not be put on ice. Private industry will be put during this period at a major disadvantage in providing the resources with which to fulfil its needs and expansion because the Government will be preventing it from doing so.
    During my time in the House of Commons I have never received such a volume of protests so widespread over the population. I have received them from industrialists, businessmen, farmers, smallholders, horticulturists, old people and those concerned with charities. All of them are wondering what the Government are at. Do the Government understand what they are doing to them? My right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) was abundantly justified in moving the Amendment, costly as he admitted it to be, in order to give the Government a badly needed opportunity for second thoughts—how much needed has been shown by the Chancellor's intervention just now.
    Sir Gerald Nabarro: We were delighted to hear the speech of the hon. Member for Oldham, West (Mr. Hale) on behalf of the Oldham Industrial Co-operative Society. At the last election, 18 Labour and Co-operative Members were returned to the House. One of them is the hon. Member for Glasgow, Govan (Mr. Rankin). Another is the hon. Member for Willesden, West (Mr. Pavitt). Then there are the hon. and learned Member for Warrington (Mr. W. T. Williams) and the hon. Member for Bilston (Mr. Robert Edwards).
    The hon. Member for Oldham, West has a covey of five of them seated in the
    1278
    decimated ranks of the party opposite—decimated because of the failure of the remaining 12 Co-operative Members to be present for this debate. Where are they? [An HON. MEMBER: "In the Government."] Whether they are in the Government or on the back benches, I hope that they will be voting in our Lobby tonight. If they are not, they are traitors to the Co-operative movement.
    Of course, the Chancellor of the Exchequer has dealt the industrial cooperative societies a dastardly blow. All the Co-operative Members ought: to register their disapproval in speeches on this Amendment to defer the beginning of the operation of this immoral, iniquitous and inflationary impost on a large section of British industry, trade and commerce.
    In the van of the movement and agitation to defer the date of this tax until next February, I expected to find the Co-operative Members. All I perceive, however, is a sepulchral silence broken only by the words of the hon. Member for Oldham, West. It is the duty of my right hon. and hon. Friends and myself to propagate widely in the country the desertion of the Co-operative Party from its true tenets and principles. Six Cooperative Members are present here today; 12 are missing.
    Mr. W. T. Williams: I am sure that the hon. Gentleman would not like to make a bad point. He has omitted to mention my hon. Friend the Member for Bethnal Green (Mr. Hilton), who is also present beside me.
    Sir G. Nabarro: Delighted. We have seven out of 18, so 11 are missing.
    Mr. W. T. Williams: The hon. Gentleman's arithmetic is wrong. The hon. Gentleman sitting in the Chair is also a Co-operative Member.
    Sir G. Nabarro: I cannot allow that, Mr. Irving. I must protect the Chair. This is one of those unique occasions when I spring to the defence of the Chair.
    There are eight Co-operative Members present out of 18, and those eight include yourself, Mr. Irving. Thus, 10 Cooperative Members—the majority—are missing. That represents approximately 56 per cent. of them missing and 44 per cent. of them present. It is disgraceful,

    1279
    Mr. Irving, having regard to their election promises.
    Now I must pass to the Amendment. It fascinates me to know how the Treasury has computed its figure of a revenue of £315 million during the current financial year. I quoted this figure in an earlier speech in Committee and was roundly condemned by hon. Members opposite. Later, they went to look it up in the Financial Statement 1966–67, but no one came forward to admit that my figure is correct.
    The Chancellor admitted today that it is correct that he expects a net revenue of £315 million from this tax if it is collected from 5th September next. We seek to defer it until the beginning of February, for the reasons so cogently expressed by my right hon. and hon. Friends and myself. I could not go along with the Chancellor when he said that, were the deferment agreed to by the Committee, it would mean a loss of revenue to him of more than £200 million on the budgeted sum. Indeed, no.
    The Chancellor seems to have forgotten what the Financial Secretary told us the other day, when he said that a hypothetical loss of revenue would be unavoidable if he accepted an Amendment in connection with fuel oil duty, moved by my hon. Friend the Member for Yeovil (Mr. Peyton) and myself. The right hon. Gentleman had forgotten that this form of taxation, S.E.T., is admitted as chargeable against profits for purposes of computing a company's liabilities to Corporation Tax.
    5.30 p.m.
    The Treasury itself is, therefore, paying half or more of the net cost to companies of this form of taxation because it is an admitted charge against Corporation Tax. I am glad to see that the Chancellor of the Exchequer assents. I have him on my side at last. What I want him to do at an early date is to justify how he arrives at this figure of £315 million, because we do not know.
    The Treasury makes such wildly inaccurate estimates a year ahead, of the yield of taxation, as I pointed out a few days ago on an Amendment to reduce the standard rate of Income Tax. The Treasury was wrong last year by more than £80 million in the yield of Income
    1280
    Tax, and I think that it will be equally wrong with the £315 million which it postulates as being the net yield of the Selective Employment Tax in 1966–67. Therefore, were I to be convinced of the Chancellor's argument that he cannot afford the loss of revenue which deferring the onset of this form of taxation would incur, I would want him to publish a detailed computation of how he arrived at the figure of £315 million, taking into account what I have said.
    The estimated interest-free loan to the Government inherent in this form of tax is £100 million a month. We do not know and I do not suppose that the Chancellor knows, or that the Minister of Labour, or Dr. Kaldor, or Dr. Balogh, or the remainder of the bunch knows, how long it will take the Government Departments to repay this tax, with or without the premium. The machinery is complex. I worked out my calculations on the basis that the average time for repayment would be five to six months.
    At this point, I fall out with my hon. Friend the Member for Oswestry (Mr. Biffen). In an intervention in the Chancellor's speech, my hon. Friend said that the effect of the tax would be to reduce the liquidity of companies. To put it in the simpler and homelier terms which company directors understand, what he was saying was that its impact would reduce the liquid resources of companies. My hon. Friend went on to say that that would result in a diminution of investment. I doubt it. It might, but that is a guess.
    What it is much more likely to result in is prices being put up. There are whole sectors of industry in a position to raise prices and recoup the cost of a tax of this sort, for example, baking, milling, brewing and spirits, and a whole range of consumer industries. The impact of the tax is much less likely to result in a diminution of capital investment, although it might in some measure, and that will depend on the type of company, its business, location, financial circumstances, age and a hundred other factors——
    The Deputy Chairman: The hon. Gentleman must relate his remarks to the question of the date.
    Sir G. Nabarro: Thank you, Mr. Irving. You or your predecessor may

    1281
    have heard the hon. Member for Oldham, West refer to the fact that there were half-a-dozen ensuing Amendments on the Notice Paper and that he proposed to deal with them all in his speech and make it a "Clause stand part" speech. Before you occupied the Chair, we had this problem of liquidity——
    The Deputy Chairman: The hon. Gentleman must accept that I have been very tolerant with him, too.
    Sir G. Nabarro: All right, Mr. Irving. I will finish my sentence on liquidity and pass to the next subject.
    I do not accept the argument of my hon. Friend the Member for Oswestry that the tax will result in a diminution of capital investment. It might, but it is much more likely to do the opposite of what the Chancellor wants it to do. The Chancellor has said several times that he readily admitted the impact of the tax to be deflationary. I do not think that it will be deflationary. In conditions of over-full employment, when the aggregation of registered unemployed and transfers on the day of registration from job to job are at the ridiculously low level of 261,000, out of a working population of almost 25 million, gross over-employment which is the cause of the severe labour shortage in so many industrial areas, all that will happen when the tax becomes effective is that prices will be marked up to pay for it.
    That is why I believe my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) to be right to plead that all the aspects and features of this form of taxation ought to be examined in much greater detail. The balls should be allowed to run along the table for a period of a few months so that we may examine all these complex factors and determine whether my hon. Friend the Member for Oswestry and my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) are correct in their supposition, or whether I am correct in mine.
    In any event, I say to the Chancellor—and I have not been unkind to him this afternoon, but merely begged to differ about his assessment; he thinks that this form of taxation, of £315 million extracted from the economy this year, is deflationary—that in the event it will be extremely
    1282
    inflationary, having regard to the conditions of gross over-full employment which we suffer in this country and the acute shortage of labour in most of the industrial areas of Britain.
    As I am about to resume my seat in the next few minutes I hope that we shall witness the sensational spectacle of eight Co-operative Members leaping to their feet to oppose their own Chancellor of the Exchequer and to vote with my right hon. Friend the Member for Enfield, West, my hon. Friends and myself, thus demonstrating not only the solidarity of the Co-operative Party, but their faith in their own movement and the fact that they are courageous men prepared to walk through my Lobby with me this evening and not run away from the Chancellor of the Exchequer.
    Mr. John Rankin: Can the hon. Gentleman tell me why none of the Co-operative Members on his side of the Committee has so far said a word in support of him or any of his colleagues?
    Sir G. Nabarro: As far as I am aware, no Tory Member is officially sponsored by an industrial co-operative society. [Interruption.] I am not sure whether the Committee is addressing me, or I am addressing the Committee, but I repeat——
    Mr. Rankin: No co-operation.
    Sir G. Nabarro: —no Tory Member is sponsored by an industrial co-operative society.
    Mr. Rankin: Shocking.
    Sir G. Nabarro: It is not shocking. On the appropriate Amendments later, when I shall be strictly in order and not following the hon. Member for Oldham, West, who was grossly out of order, I shall allude——
    The Deputy Chairman: Order. The hon. Gentleman must leave questions of order for the Chair.
    Sir G. Nabarro: I defer at once to your rebuke, Mr. Irving, and I thank you for it.
    At a later stage of the Bill I shall allude to private co-operative associations which support my hon. Friends, not the co-operative societies, such as the Oldham

    1283
    Industrial Co-operative Society, which are officially affiliated to the party opposite. I am speaking of private societies which are not officially associated with my colleagues and myself, but who generally support us. We wait to see the interesting spectacle of eight Co-operative hon. Members opposite rising and seeking to catch your eye, Mr. Irving, when I resume my seat.
    Mr. Norman St. John-Stevas: This is a most important Amendment. The provisions for the collection and the anticipated refund of this tax suffer from two grave defects. First of all, they are ridiculously cumbersome, as my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) has pointed out, and, secondly, and perhaps even more important, they are unjust in their operation. This Opposition Amendment has to be seen in the context of the whole means of collection of this tax.
    To collect the tax, which would have a yield of about £240 million, the Revenue has first to gather in more than £1,100 million. It was this feature of the Bill which was derided recently by the Economist as "custard pie economics". The gap between payment and refund will continue throughout the whole period of the levy of the tax and we still do not know, when the tax gets under way, what arrangements will be made for the refund of the levy. We do not know whether there will be a quarterly, a monthly or a weekly gap.
    This is typical of the whole, ill-thought-out nature of this tax. It is apparently the Government's strategy——
    Mr. Joel Barnett: On a point of order. It might be helpful for the Committee to have a Ruling as to what precisely is "tedious repetition". Does it mean repetition in the same speech or in different speeches?
    The Deputy Chairman: The hon. Gentleman must allow the Chair to decide, on the issues arising, what is tedious repetition and what is not. I can assure the hon. Gentleman that I will take good care.
    Mr. St. John-Stevas: After that rather tedious intervention I resume my remarks, and will use a simile which has not, as far as I know, been used
    1284
    earlier in this debate. This whole operation is rather like a game of "Blind Man's Buff", with all the players, including the Chancellor, blindfolded.
    What is inexcusable about this approach is that we have seen it all before. This is exactly the same approach which characterised the Finance Bill of last year. The Treasury team, like the Bourbons, have learned nothing from that experience. The initial five-month period, between the imposition of the tax and the return of several parts of it is a forced loan, interest-free to the Government.
    It is typical of the Government that they should introduce what is a penal taxation Measure in this indirect and dishonourable way. The Chancellor's defence, which we heard this afternoon, was that this tax is deflationary. He argued that the yield would be effectively reduced, if the Opposition Amendment were accepted, by about £200 million. He should have thought of that before drafting the tax so inadequately that it can only be made effective by perpetrating an injustice upon many companies, large and small, and by unjustly imposing a penalty, not only upon companies but upon charities.
    When one considers this combination of imposing penalties on charities, on manufacturing industries and on service industries, one is entitled to ask what has become of the selective nature of this tax, which, we were told, was the essence of it. There is no precedent in modern financial history for such a forced loan.
    5.45 p.m.
    I have mentioned the Bourbons. May I now refer to another unhappy dynasty, the Stuarts. One has to go back to the Stuarts before one can find a similar tax. Whatever may be said about that unhappy dynasty, financial responsibility was not the most prominent of its virtues. The closest parallel to the operation of this forced loan is the Benevolence which was imposed by Charles I.
    Mr. Patrick Gordon Walker: Is it not a fact that the wickedness of that was that it was imposed by the King as a way of getting out of Parliamentary control of finance, so the analogy is altogether false?
    Mr. St. John-Stevas: I would have thought that that intervention confirmed the analogy rather than undermined it.
    Mr. Emrys Hughes: On a point of order. Are you aware, Mr. Irving, that on Thursday last, Mr. Speaker gave a Ruling that analogies should not be made with a period earlier than 1935? Is it in order to go back to the Stuarts?
    The Deputy Chairman: That is not a point of order.
    Mr. St. John-Stevas: May I remind the Chancellor, through the Chief Secretary, of the fate of Charles I. He lost his head. Fortunately, or unfortunately, we are more restrained today. By operating the tax in this unfair and inequitable manner the Chancellor is in danger of losing something which is perhaps more important than his head, and that is his reputation.
    Companies will clearly have to borrow from the banks to meet their commitments, and they will be borrowing at a time when banks are near to the ceiling of the advances which they can make, because of the other financial policies of the present Government, both in relation to Income Tax, and to the conditions created by Corporation Tax.
    My right hon. Friend the Member for Enfield, West pressed the Chancellor to give details of the means which he intended to use to facilitate bank advances. One could bear with a little tedious repetition on that point, because we have had no information of any kind about what steps the Treasury proposes to take to facilitate bank advances and so help companies at a time when they will be very seriously embarrassed by this five-month period of the enforced loan.
    The tax will have an effect upon liquidity, and I would support my hon. Friend the Member for Oswestry (Mr. Biffen) in saying that it is also likely to have an effect upon capital investment. This Amendment will improve the tax by eliminating the five-month period of the forced loan. In itself, the existence of the forced loan is a major injustice and, since the Government, through the Chancellor, have declined to modify their stand on this issue, I trust that it will be pressed to a Division later this afternoon,
    1286
    supported by all the members of the Co-operative Party opposite.
    Mr. Pavitt: I hope that the hon. Member for Chelmsford (Mr. St. John-Stevas) will forgive me if I do not follow him back to the time of Charles I. I wish to set at rest the mind of the hon. Member for Worcestershire, South (Sir G. Nabarro), because I can see that he has a good deal of anxiety about our position. We shall make our own contribution to this debate in our own way, in our own time and as constructively as possible. We have a number of points which we should like to discuss with my right hon. Friend the Chancellor of the Exchequer. We are concerned about the date, but that is not the most important point and for that reason we have tabled a number of Amendments.
    In the meantime, in case the hon. Member for Worcester should be concerned——
    Sir G. Nabarro: Worcestershire, South.
    Mr. Pavitt: I always think of the hon. Gentleman as being the Member for Kidderminster. Perhaps it is the "Kidder" part which sticks in my mind.
    I assure the hon. Gentleman and other hon. Gentlemen opposite that, however much they seek to incite or discourage us, we shall deal with the matter in our own way, in our time, and to the best of our ability.
    Sir John Eden: It became clear almost immediately after the Budget statement that the Selective Employment Tax had not been thought through. One of the advantages of this Amendment is that it will give the Chancellor of the Exchequer considerably more time to reflect on the many anomalies which he has created and to ensure that people whom he does not mean to tax or penalise are not called upon to pay it even for the limited period of six months. I agree with the speeches made by my hon. Friends that it is wholly wrong for the Chancellor of the Exchequer to call for an interest-free loan in this way and particularly to expect those whom he does not intend to tax to subsidise him.
    I wish to emphasise the point raised by the right hon. Member for Orkney and Shetland (Mr. Grimond) and my hon.

    1287
    Friend the Member for Yeovil (Mr. Peyton) about the extent of the impact of this tax on smaller people. I thought that the Chancellor of the Exchequer rather pooh-poohed what they were saying and discounted it completely. It seems to me that he is far removed from the realities of the position of many people engaged in business and industry.
    I should like the imposition of this tax to be postponed by at least six months so that the Chancellor has a little longer to carry out some research to enable him to come nearer to the true facts of industrial and commercial life and to find out what is agitating and concerning people. He seems to be wholly unaware of the damage, frustration and concern which his proposals are causing to a great many people.
    Smaller people are likely to find themselves in particular difficulty in trying to extend their bank borrowing facilities. It is not particularly well, but reasonably well for the larger undertakings which may have more substantial assets and better opportunities for financing operations. But for smaller people who, apart from any new impost placed on their shoulders, are finding their relationship with their bank managers not particularly enjoyable, this further imposition will make life extremely difficult. I ask the Treasury Bench to bear that point in mind. These people will be harder hit as a result of having to finance this tax in advance of the time when it is necessary for them to pay it.
    Another reason why I support the Amendment is the enormous cost which the administration of this tax will involve. It seems to me totally ridiculous, as it does to every hon. Member, that the net yield of the tax—my hon. Friend the Member for Chelmsford (Mr. St. John-Stevas) said, I believe, that it would be £240 million—would involve the collection of £1,100 million or so. It is to be collected, to a great extent, from people whom the Chancellor of the Exchequer does not intend to tax at all. In addition, it will be collected from people to whom it is the Government's intention to pay a premium. If it is their intention that employers in manufacturing industry shall benefit from some special payment contrived by the Government, then let them make that
    1288
    payment. Why should they first require employers to borrow money in order to pay an interest-free loan to the Government for six months? This is not right in equity, and the cost of this operation must be very great indeed.
    A very important point which has been touched on but on which I should like further elucidation concerns the position of those engaged in completing a contract for which a fixed price has been negotiated. I realise that the Chancellor has referred to this point, but I should like further clarification of it because I have had many protests and anxious letters about it. In many instances, those engaged in manufacturing industry who will have to pay this levy for six months before receiving any premium will be concerned with the conclusion of a contract for which they have agreed a fixed price during that period.
    It may well be argued that in due course they will get some form of benefit and, therefore, they should not take into account the payment they are required to make in the interim. But the fact remains that these employers will have to pay in the interim. Surely some consideration should be given to the position in which they find themselves which distorts the whole basis of the figures on which they have agreed a fixed price for the contract.
    Like, I believe, all hon. Members, I thoroughly dislike this proposed tax. I support the Amendment for the important reason that it would give the Chancellor of the Exchequer a further opportunity to consider the many anomalies and problems he has created by introducing the tax. When a tax is imposed, it should be just, simple and fair. This tax is manifestly unjust and, clearly, very complicated. Worse still, the Chancellor has indicated that in many respects he would like advance payment to begin so that he might get experience from the operation of the tax in order that further modifications might be made as they were required. It is wholly wrong to impose a tax in these circumstances.
    I beg right hon. and hon. Members opposite who are concerned with this new tax to delay its introduction to give them an opportunity to think it through properly, to remove all its worst aspects

    1289
    before it is introduced and to make certain that when it comes in it is as fair as it can possibly be made to be, and so that due consideration can be given by them to the position of all those who are called upon for six months to pay an interest-free loan to the Government.
    6.0 p.m.
    Mr. W. R. Rees-Davies: I am glad to follow my hon. Friend the Member for Bournemouth, West (Sir J. Eden) at this stage, because I want to pick up one or two new epithets which have been cast around about this tax. Those that I give to it are somewhat different and they develop a different argument.
    My first epithet is that, curiously enough, it is a very unclean tax. It is a tax upon our cleanliness. I shall deal with two aspects, the cleaning and the laundry industries, which are most hard hit of all by it. Secondly, it is a very unkind tax, because it is heavily loaded against the old, the disabled and those who work part time. Thirdly, it is uncertain. In so far as it will have any disinflationary effect, that will be because it causes unemployment.
    The reason why I want to postpone the tax from 5th September for a while—certainly, February would be ideal, but I would be content with a period of two months—is quite different from the arguments so far addressed to the Committee. I am moving from the general arguments which have been so ably put by my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) and by many other hon. Members, by my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) and all of them.
    The reason why I believe that 5th September is a quite inhuman date is that during that month the fixed-price contracts which were fixed last year will be in operation. For every holiday contract and for every late holiday, the whole of the hotel and catering industry has made all the arrangements for the autumn. They are all fixed. Take, for example, Butlin's. In September, nearly 9,000 people will be at the camp at Bognor. They have all arranged their prices for their contracts and their holiday, and yet that company will have to pay for over 2,000 staff from 5th
    1290
    September onwards. What will the Government do about that?
    The real question, as is well known, is whether as a matter of the common law the companies are entitled—they will not want to do it—to say, "This was not reasonably within the contemplation of the contract and, therefore, we are entitled to make an extra charge for this entirely new issue which has arisen." I do not know whether the Financial Secretary to the Treasury has taken legal advice about this—I have no doubt that he has—but will the answer be that the companies may make an additional charge from the time when this tax comes into force?
    From a commercial point of view, it is quite impracticable for all the hoteliers in Margate and Ramsgate and throughout the country to say to those who arrive under arrangements which were made last year and in the winter and spring, "I am terribly sorry. You have come to stay with us from 5th to 12th September, or from the 12th to the 19th. Bad luck on you. You now have to pay another 7 per cent. more because we have to pay this miserable tax, which neither you nor I knew anything about." Therefore, it is quite impractical to hold to the date of 5th September, which must be put off to the back end of the season.
    That, however, is the least of my worries. The reason why I say that this tax is extremely unkind is because an effect of it will be creative of unemployment in the one sector where it is least desired. It may well be that in conditions of over-full employment there is a case to try to get flexibility in the Midlands, but this certainly does not apply in the case of Thanet, the seaside resorts or even those other parts of the country where a large number of people who are old-age pensioners and disabled are employed.
    It so happens that in my constituency we have a larger number of people on National Assistance than in any other constituency in the United Kingdom, not because they are unemployed or unemployable, but because we have so many elderly people, women over 60 and men over 65. In the summer months and continuing into September and October, they earn a small sum of money, mainly on

    1291
    part-time work, usually working either morning or afternoon. It is a matter altogether of not more than 20 hours a week and for most of them probably not more than about 15 hours a week. They are paid about 5s. an hour for that work.
    Normally, September carries on as a good month for the tourist resorts, but October, as hon. Members throughout the Committee know, is a bad month and very often the whole of the premises gradually start to close. What particularly occurs is that the smaller establishments, which do not have the staff and which are not able to get the same class of bookings as the first-class hotel gets, are the ones that close first. They work to a very tight margin.
    In the month of October throughout the country, old-age pensioners flow to constituencies such as Bournemouth, Brighton, Blackpool, Thanet and elsewhere, and we take in those old people on the cheap. Those who take them in on the cheap are the smaller and cheaper hotels and guest houses. I see my hon. Friend the Member for Folkestone and Hythe (Mr. Costain) in his place. His constituency makes considerable arrangements, as does mine, for precisely that class of person.
    The picture is undoubtedly that the part-time people, who are themselves old-age pensioners and elderly people who provide the part-time labour in these constituencies, working perhaps 12 or 15 hours a week, will get the sack; and instead of continuing for the month of October, these hotels and boarding houses will close that much earlier. Therefore, the old people who come to Folkestone, Thanet, Bournemouth and elsewhere will be deprived of the opportunity, the boarding houses will not be able to pay the costs and unemployment will also be caused to these old people. That is why I call this an unkind tax. It is unkind because it makes and draws no difference.
    The Amendment gives an opportunity for the tax to be brought into effect at a later date at the end of the season. Speaking to the argument which I am addressing to the Committee, the earliest date would be two months later, 5th November. For the purposes of the argument I am using—although I entirely accept and adopt everything that has been said to the
    1292
    Amendment generally—I merely ask that there should be a two-months' delay.
    The same argument, unfortunately, applies in the case of part-timers. Just as we have the elderly people, so the hotel and catering industry has made extensive arrangements throughout the Metropolis, in the cities and elsewhere to employ very large numbers of part-timers. These people again, in the general nature of their employment, are in many oases the whole of the contract cleaning industry, the army of Mrs. Mopps. The Mrs. Mopps are people we must not upset. They are very difficult to get. Speaking for myself, I think that this is one of the worst features of the tax. Seriously it is. They work for about 5s. an hour for 15 hours a week and the average Mrs. Mopp earns £3 15s. a week.
    The horrifying feature of this is that 75 per cent. of the Mrs. Mopps, being married women, of course work part time because they have to look after the kids, they have to do the shopping they have to look after hubby in the evening; but if we want clean hotels and clean catering institutions they must have this domestic staff. Also other women of the country need to have this domestic staff, too, because the domestic staff, the Mrs. Mopps, are today looking after the homes of the women whom the Government want to go out to work in the factories. If we discourage married women from working part time we deprive ourselves of the cleaners who will look after the homes for the women working full time in the factories.
    This is where this tax is ill-conceived, and unkempt, and not thought out, because unless we give ourselves time for these arrangements to be made by putting this tax back a month or two—give it, perhaps, to February—people will not be able to work out arrangements which will have to be made by the contract cleaning industry as a whole.
    Mr. James Tinn: If these Mrs. Mopps are working for married women working in factories or the professions, does the hon. Member not think they could afford to carry the 12s. 6d.?
    Mr. Rees-Davies: No. I am quite convinced they cannot. I will answer

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    that straightaway. First of all, the women we are talking about, I am sure the hon. Member recognises, are not people who can work in a factory. Many of them are middle-aged people, who work a number of days in the week and, say, two or three hours a day——
    Mr. Tinn: I obviously did not put my question clearly enough. I was suggesting that the wife, the lady of the house, who is thus released for employment, and who will be paying the tax, will be able to pay it.
    Mr. Rees-Davies: No. I do not think that is true either. The fact of the matter is that the stamp as it stands at the moment—I must not go into the amounts of this at this stage, because that is a question which arises on later Amendments, but the hon. Gentleman will recognise this—means that if we add 12s. 6d. to a matter of £3 a week which one is paying—and it is an extra 12s. 6d.—it represents altogether an impost of something like—what is 12s. 6d. of £3 percentagewise——
    Sir G. Nabarro: Just under 20 per cent.
    Mr. Rees-Davies: —some 22½per cent., a very considerable sum. It is an enormous impost, whereas on the ordinary wage packet of £20 a week it is only 5 per cent. Therefore the impost—the hon. Member follows my point?—upon the employer of a domestic cleaner is four times larger than what one is paying in industry for the normal working man. This, of course, must be quite wrong. It cannot be right to charge four times as much for the woman for her cleaner by way of taxation than what is charged the ordinary employer in industry. I can see, Sir Eric, that you are looking at me as though——
    The Chairman: The hon. Member is getting a bit far from the Amendment.
    6.15 p.m.
    Mr. Rees-Davies: I was drawn away by the intervention which the hon. Member made, but I entirely agree with you and I will pass to the next point. As I say, there will be an opportunity to return to it later.
    Having pursued the matter for this aspect of the tourist industry, I respect-
    1294
    fully submit that the Government have not—I repeat, not——
    Sir G. Nabarro: On a point of order. Is it in order, Sir Eric, for the Deputy Chief Whip to hover at your elbow ready to pounce? Is it a fact that you are about to accept a Motion for the Closure from him? If so, would it not be in order for my hon. Friends and myself to protest?
    The Chairman: The hon. Member really ought not to make an interruption of that kind. I have not seen anyone hovering at my elbow.
    Sir G. Nabarro: Further to that point of order. I saw him hovering, Sir Eric.
    Mr. St. John-Stevas: I hope he will not hover over me.
    Mr. Rees-Davies: Well, Sir Eric, as I am one of the few Members here who has hovercraft in his constituency, I perhaps have a little knowledge of hovering and perhaps I may be permitted to carry-on.
    The point I am making, following, as I say, a somewhat different line, on this idea of the postponement—if the Minister would be with me for a moment on it—and the arguments which have been ably developed as to the difficulties of companies being able to obtain overdrafts, is, as the Chancellor admitted with a nod, that of course industry can charge this tax to Corporation Tax. I would point out that the small boarding-houses and the Mrs. Mopps and the old-age pensioners—all these people who will carry the reality of this tax—have no Corporation Tax against which they can pass it on.
    This tax in its essence, when we consider one is paying something like £3 to £6 a week to employ the part-time person, the old-age pensioners, is this, that the consideration in the employer's mind will be entirely, "Is it worth paying out at the full rate, to employ a part-timer, an old person or a disabled person, if one is unable to charge against it any Corporation Tax because one is not paying Corporation Tax? "Clearly, one comes back to the extraordinary injustice here of the difference of the rate of the impost for the full industrial earner and that borne in the case of the higgledy-piggledy people, as I say, the old-age pensioner.

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    the Mrs. Mopps, all those who feed this industry with its labour.
    I conclude by saying that I really feel that we must put this date back at the earliest towards the end of the tourist season so that arrangements can be made in the hotel and catering industry, which employs so many of these people, because of the contracts with those with late holidays, and so that those in constituencies which are so deeply affected, such as my own, will be able to ensure that we do not have unemployment of the part time and elderly. If we do have that unemployment it means that the Government will sooner be paying more National Assistance, and the impost which they will have to pay soon enough anyway, and which at present they do not have to pay till September whilst these people are in employment. For these reasons, somewhat different, but in support of the others, I, too, hope that we shall have the assistance of a co-operative move to be able to bulldoze the Government on this Amendment.
    Mr. Burden: I have no intention of detaining the Committee for very long, but I should like to make one or two points. We are engaged in this debate today because the Chancellor and the party opposite have taken the view, as the Chancellor explained during the debate on the Budget, that if we look around and find an area in which tax is not being paid, that appears to be unfair to the firms and industries and areas by which tax is being paid; the Government therefore impose this tax.
    But this is going beyond that. This is in fact saying to the manufacturers and industry of this country, "We, the Government, want you also to give a tax-free loan". Indeed, it amounts, as has already been said, to a sum of about £100 million a month, and the Government have indicated that there will be no effort to repay that amount till at least five months, and it may be six or seven months, after this monthly sum of £100 million has been levied on the working capital of companies.
    Whilst the Chancellor was making his speech, I asked him if he would ensure that, during the five or six months of the operation of the tax before the repayments were made, no measure
    1296
    was taken by the banks to make it more difficult for firms to increase their borrowings or to increase the Bank Rate. It is quite evident that, as a result of having to make this forced loan to the Government, a considerable number of firms both large and small will of necessity have to go to the banks to increase their loans and obtain new loan facilities. That cannot in any way be justified.
    The other day, in my presence, the Chancellor said that there was no great opposition to the tax throughout the country. If he believes that, ha is truly living in cloud-cuckoo-land. I am quite sure that he has had far more representations than any other individual hon. Member has. I have had them from the butcher, the baker, the candlestick maker, Uncle Tom Cobley and all, as I think most of us have. The tax is thoroughly disliked, and the method of collecting it and the delay in repaying those firms which are entitled to have it repaid are matters that are causing considerable concern.
    I want to turn for a moment to the question of charities. During the earlier stages, the Chancellor was obdurate in saying that there was no intention of repaying the charities, and obviously there could not have been. If it was always the Chancellor's intention to make repayments to the charities, why did he not make that perfectly clear at a very early stage? It caused them considerable concern and apprehension. I am quite sure that most of the people connected with charities and hon. Members of the House believe, as I do, that the relaxation in favour of charities was very largely brought about by criticism in the House, not only from these benches but also the strong criticism from the benches opposite and no doubt representations made behind closed doors by members of the party opposite.
    However, despite the fact that the sums are going to be repaid, the charities are being asked to make a forced loan to the Government. Dr. Barnardo's Homes will have to pay £50,000 to the Government before getting one penny back. The same is true of the Church Army. In the case of the R.S.P.C.A., the sum involved is about £20,000. The Chancellor says that he has no desire to hurt the charities, but is he not still hurting them by demanding that they give

    1297
    to the Government a tax-free loan of considerable sums of money? Is that not likely to make it difficult for them to meet their commitments?
    I can assure the right hon. Gentleman that most charities run from hand to mouth if they have not got reserves.
    Mr. A. P. Costain: Will my hon. Friend give way?
    Mr. Burden: I will give way in a moment. I hope that the right hon. Gentleman will show his realisation of that fact by finding some means of taking this penalty away from the charities, if not by accepting the Amendment as it stands, which embraces everything.
    Mr. Costain: I am grateful to my hon. Friend. Would he allow me to point out that the Amendment will be a great advantage to the charities because their funds are low at this time of the year, between September and Christmas? Most of their funds come by way of responses to their Christmas appeals, and the tax will hit them at the worst time.
    Mr. Burden: I agree with my hon. Friend that not only is this the period during which they find it most difficult to raise money, but, correspondingly, it is the period during which most of them have large sums of money to find and when their expenditures are at their highest.
    If I can have the ear of the Chief Secretary for a moment, I hope that he will take this matter seriously. It is still a matter of concern for the charities that they will have to provide this tax-free money. What a ridiculous situation will arise if, as a result of having this money taken from them, the charities are forced in turn to go to the banks and borrow and pay bank charges in order to provide money for the Government which ultimately they will have returned to them. That is absolute nonsense and cannot be justified in any circumstances. I hope that the right hon. Gentleman will look at it again.
    Mr. Gower: The two clear points which have emerged during the debates on the Bill and today are the concern about the need for further consideration and more time for reflection, and the issue about the nature of the interest-free forced loan which the Treasury will enjoy.
    1298
    There has been many reasons adduced by speakers in the Committee why it would be advantageous to the Government for there to be some further time for consideration. The Chancellor himself did not attempt to argue against the case made for further consideration and more time. What he said, in effect, was that he could not consider it because he needed the money to deflate the economy in the autumn; he even named the month of September.
    What frightened me about it was the manner in which the Chancellor said it. It was as though he was quite sure that, in this new form of tax, he had an instrument of the most perfect precision the consequences and effects of which were well known to him. The fact is that he has an instrument which is quite untried and unproved, the consequences of which he cannot foretell. It is an instrument which is far reaching in its effects, as has been pointed out today. It will affect all kinds of industry, both large and small companies. It will affect the new and the old, the efficient and the not so efficient. It will affect those which have great resources and those which have not, those whose liquidity permits them to meet immediate calls on their resources and those whose liquidity does not. To say the least, this instrument may have very unpleasant consequences for many firms, particularly those in the smaller categories.
    My right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) suggested that while the Government took a little more time under the terms of the Amendment to work out the consequences and make provision to minimise the less desirable ones, they could meet the objection of the Chancellor by using the regulator. It seems to me that that was something which should appeal to the Government. With all its limitations, the regulator is a known instrument. It is dealing with a known tax which has been in existence for many years, the approximate consequences of which are known to us. It would not have all the unfortunate and unknown consequences of the new tax for so many of our industries and services. In those respects there is a strong case for taking more time for reflection and consideration.

    1299
    The second objection was put very well by my hon. Friend the Member for Chelmsford (Mr. St. John-Stevas). The Government are fortunate that today the Executive can get away with things which absolute monarchs could not do. We know what happened when absolute monarchs attempted to get forced loans, but the modern Executive can get away with this sort of thing. What the Government are doing is outrageous. They are to have the use of this money for a considerable period. It is not only an interest-free loan, but a forced one. Had one of the Stuart kings gone as far as this, our modern historians would have been even more surprised.
    6.30 p.m.
    I submit that the Amendment, which has been put forward very clearly and very impressively, is one which the Government should accept because it is designed to help them. If they do not accept it, they will plunge into economic unknowns, the consequences of which may well be extremely serious.
    Mr. St. John-Stevas: On a point of order. Mr. Steele, may we have the blinds down, as at the moment it is impossible to see the expression on the Chief Secretary's face?
    The Temporary Chairman (Mr. Thomas Steele): Note will be taken of the hon. Member's request.
    Mr. David Gibson-Watt: I start by saying that I have never found any difficulty in reading what the Chief Secretary's face tells us, and that I should like him to consider very carefully the arguments which have been put forward from this side of the Committee for postponing the incidence of this tax.
    It is true, as my hon. Friends have said, that when the Chancellor started off on this perilous journey in his Budget speech he little knew what the tax would lead to in regard to the insults and vilification which it has received in the country. I think that my hon. Friends have used very gentle language about it. My hon. Friend the Member for the Isle of Thanet (Mr. Rees-Davies) described it as unkind and unclean. I could go very much further, but I shall limit myself to drawing attention to the fact, as was so well done by my right hon. Friend the
    1300
    Member for Enfield, West (Mr. Iain Macleod) that the Chancellor has already benefited to a great extent by the period of time between the Budget and today.
    If more time were taken, a more reasonable attitude might be taken by the Chancellor and his advisers about this tax, if it has to be imposed. I should like in particular to draw attention to some of the people who will be hit by this forced loan to the Government. It is difficult to pick out any particular category. Indeed, all small employers will be hit by it. If someone is not in the category to which the Chancellor referred, the farmers who employ six agricultural workers to help them get a turnover of £60,000 a year, and who go to Ascot races, he will be hit by this tax.
    I am thinking now of the small employer, and the hill-farmer of West Wales. The Chancellor of the Exchequer is a Welsh Member of Parliament. Does he consider it right that somebody living on the upper slopes of Cardiganshire, or Breconshire, or Radnorshire, or even Carmarthenshire, should be asked to lend money to the Government, free of tax, in this way? Has the Chancellor considered the fact that whereas, 10 years ago, farmers as a whole were well off on the credit side of their bank accounts, many millions of pounds on the right side, today they are many millions in debt? This tax will add to their debts. Does not the right hon. Gentleman agree that this will be an additional burden, particularly on small farmers in these isolated parts of the country?
    Sir Douglas Glover: Is my hon. Friend aware that one hon. Gentleman opposite said, "Send the bailiffs in"? This is what hon. Gentlemen opposite think of the farmers.
    Mr. Gibson-Watt: I do not know what they think of farmers, but anyone who understands the other meaning of the word "bailiff" knows that on the farms about which I am talking farmers cannot afford to employ a bailiff. The sort of farm to which the Chancellor was referring can employ a bailiff, and possibly he is left there when the so-called people to whom the right hon. Gentleman referred go to Ascot Races. There is a case for taking time to think again, and to realise that this enforced loan is very much resented by small

    1301
    employers in these outlandish parts of the country, important as they are.
    I conclude by repeating to some extent the sensible words of my hon. Friend the Member for the Isle of Thanet who talked about the tourist industry. It is not only the resorts in the southern half of the country which are affected. The Highlands of Scotland, Western Wales, and other parts of England are also affected, and they will again be hit by this tax.
    I shall not indulge in endless repetition of the reasons why I believe that the tourist industry should be helped. I merely ask the Chancellor whether he thinks it is right that these small employers should have to pay this enforced loan, when, as a result of opposition, both outside the House and inside it, he has decided now to take a slightly different view from that which he took in his Budget speech with regard to the agricultural industry?
    Mr. John Pardoe: I do not wish to delay the Committee for long. No doubt we shall be here until the bacon and egg hours of tomorrow morning. I believe that the Amendment should be accepted, because there is a lot of room for further consideration of this tax. I know that many people say that Governments never change their minds, no matter how long the discussions last, or how many words we use.
    The Chancellor said earlier today that he thought there would be ample discussion of this tax. I do not think that the accusation that Governments never change their minds can be levelled against this Government. On the contrary, I think that they are in need of the admonition which Adlai Stevenson once gave to President Eisenhower, "Don't just do something, stand there".
    This tax was announced about eight weeks ago, since when we have had several major changes. Agriculture has been taken out, mining, quarrying and the extractive industries have been removed, and charities have been exempted. We have also had a considerable new impost with regard to companies with an administrative block on one side of the road, and a manufacturing block on the other.
    1302
    Those are four major changes which we have had in about eight weeks.
    Mr. St. John-Stevas: Thanks to the Tory Party.
    Mr. Pardoe: That intervention is not very helpful. This has happened as a result of pressure in the country, and I think it is accepted that Liberals have played a considerable part in this. If we have had these major changes in eight weeks, then, with a little extension of the period for digestion, we could hope for even better changes.
    As a new Member, I had hoped that a Government with all the brains they have at their disposal would be able to bring in a tax without having to make all these major changes. One wonders why they employ economists at the Treasury. Is there no advice which they can take before a tax is announced? It is an extraordinary position and gives one no great confidence in the Government's ability either to take or to listen to professional advice.
    The hon. Member for Oldham, West (Mr. Hale) quoted a saying by "Nye" Bevan, "Establish your principles". I had always supposed that one principle of Socialism in taxation was, "From each according to his ability to pay". It was certainly a principle of the Socialist Party when I was a member of it, but I am aware that the Socialists have lost many of their principles since I left.
    I should like further consideration given to the effect of the tax on the regions. Has the Chancellor considered the effect on the regions?
    The Temporary Chairman: We are not discussing the principles of the tax at this point. We are discussing an Amendment and I hope that the hon. Member will relate what he is saying to the Amendment.
    Mr. Pardoe: I stand corrected and I thank you for pulling me back into order, Mr. Steele. Many hon. Members have strayed further from the point than I have strayed, but I will try to relate my remarks to the Amendment.
    We need a period of time for consideration, because we wish the Government to look at the effects which this tax will have, and I do not believe that sufficient

    1303
    consideration has yet been given to those effects or will be given to them before 5th September. I related these remarks to the particular effects on the regions. Has the Chancellor been advised of these effects? Did he take advice from the regional councils before announcing the tax? Did they give him advice on what the effects would be in the regions? Much greater consideration must also be given to the so-called selective nature of the tax.
    The Temporary Chairman: Order. We are not considering the selective nature of the tax. We are considering the date of operation.
    Mr. Pardoe: I again stand corrected. I am trying to make the point that this is one of many matters which must be considered during this period and it is one reason why at the outset of my remarks I said that we needed further time to consider the tax.
    We have not had very careful consideration of the effects of the tax on particular industries. In my constituency the hotel industry is of major importance. September is an important month in the financial year of the hotel industry and bang in the middle of this period, after having entered into agreements, they will suddenly be forced to pay this additional tax. Hotels make their arrangements 12 months ahead. Christmas is the time for hotel bookings and many agreements which were entered into last Christmas will have to be honoured after the imposition of this tax.
    We need further time for consideration, because the tax shows that the Government will continue to introduce new legislation of this sort without sufficient consideration of the demands of industry. It has been accepted, for some unknown reason, ever since Dr. Dalton's time, that a Government must not talk about taxes until they have brought them before the House. In this case, that is a very bad principle of taxation. The Government should have discussed this tax much more fully with industry to see what effect it would have.
    6.45 p.m.
    Another problem concerns the interest-free loan. The hon. Member for Hereford (Mr. Gibson-Watt) spoke about the problems of hill farmers in Wales and
    1304
    Herefordshire. While he was speaking an hon. Member opposite commented, "Send the bailiffs in." I believe that this is typical of the urban-minded Government that we have and their attitude to rural problems and the farming community. It is well known that legislation already announced is aimed at sending in the bailiffs to many more small farms. Small farmers in my constituency in Cornwall can get nowhere by going to the banks for better credit. They are up to the hilt in overdrafts and it is nonsense to suppose that they should make an interest-free loan to the Chancellor.
    It is part of the purpose of the tax to get industries to reinvest in labour-saving equipment, but at the same time, we have a situation in which capital is being taken from industry which could be used for investment in labour-saving equipment. This is a curious way of encouraging labour-saving practices in British industry.
    This delay is needed. It is a bad tax now and probably will be a bad tax five months later. Nevertheless, in this case it is better late than now. It is not good enough for the Chancellor to say, in answer to the point made by the right hon. Member for Enfield, West (Mr. Iain Macleod), that he had not heard of the case of the British Oxygen Company, Limited. It is important that cases of this sort should be discussed fully between industry and the Government before such a tax is introduced. That is why I believe that we need this additional period to make the tax a lot better than it is now.
    Mr. Costain: I do not think that any Amendment could do more good to my constituency than this and that is why, in order to attend the debate, I have neglected a call of duty by the Estimates Committee to go to Scotland. If any tax in itself were designed to hit a constituency like that which I have the honour to represent, this is the tax, for the Chancellor has hit the bull's eye.
    The hon. Member for Cornwall, North (Mr. Pardoe) said that there had been eight amendments in eight weeks. This Amendment will delay the introduction of the tax by nine months, but it still will not make it a legitimate tax. The delay may give the Chancellor an opportunity to make more sense of it

    1305
    because I believe that the tax was introduced not only without thought, but also for a political purpose.
    I expect that when we come to the next General Election, and we are pointing to the increases in taxation which the Socialists have brought in, this tax will be forgotten because it does not fit into other forms of taxation. We should not have had the argument about allowing a contractor to contract out of his contract if it had not been a different form of tax. It is well known that when Purchase Tax has been increased, it has been quite legitimate for the buyer to pay the additional Purchase Tax. By delaying the tax for nine months the Government will have an opportunity to widen the gap, and not so many people will suffer from the tax, arising from claims from one contracting party against another.
    The tax has hit the hotel industry very hard—an industry which figures very largely in my constituency and other coastal resorts. There are many hotels, particularly small hotels, where they are at their wits' end to make their business pay, and it is the end of the season which makes the difference between whether their business is profitable or not. They have booked up for a number of functions at the end of the autumn months, for example, for dinners on Fridays and Saturdays—and many hon. Members know that these take place in their constituencies.
    For these dinners they employ extra staff for a short time, generally for more than eight hours. Relating the cost of this tax to the extra staff makes the difference between making a reasonable profit and incurring a serious loss. The Amendment, by delaying the operation of the tax, would avoid that injustice to hoteliers.
    Exactly the same thing is happening to small shopkeepers in my constituency. It is useless to say that, by introducing this tax, their staff will be transferred to other industries when, in many instances, other industries do not exist. When the Chancellor suggests that he wants to impose this tax to increase the revenue, he should remember that workers who are discharged will go on National Assistance and that many of them are elderly. I had tabled an
    1306
    Amendment to rectify this position but, it not having been selected, I would be out of order if I discussed it. Unless we can get some amelioration, the tax will cause chaos and confusion to small businesses.
    When the Chancellor said that he could not make up his mind on the question of bank loans, I was convinced that he had never been faced with the difficulties of trying to convince a bank manager that one needs a loan. The right hon. Gentleman should find out exactly what happens. To begin with, the manager wants to know one's prospects. The Chancellor said that he could not tell the prospects until a later date. Is he not aware that bank managers generally go on holiday in July and August and that future loans are fixed just before or at that time? It is important that the change proposed in the Amendment is made because, by delaying the operation until February, some help will be given to small shopkeepers, hoteliers and others who so obviously deserve it.
    Mr. J. Bruce-Gardyne: Throughout our discussions in the past few weeks we have heard from both sides of the Committee ample reason for delaying the operation of S.E.T. The Government need a great deal more time to think this out and to rectify a few of the appalling anomalies which have been exposed. That should be sufficient reason for the Government to accept the Amendment.
    The Chancellor suggested that he could not afford to make the concession called for in the Amendment for reasons of the revenue management of the economy. I suspect that the right hon. Gentleman has had to adjust his judgment on this matter already, on several occasions. He originally indicated that the net yield from this tax would be about £240 million in a full year, but I suspect that that calculation was made before it was decided to draw the different categories for premium and rebate as tightly as they are drawn in the Ministry of Labour Bill, which we will discuss again on another occasion.
    I suggest, therefore, that the net yield would have been likely to be appreciably more than £240 million but that

    1307
    there may be a reason why the Chancellor could not take this into account when considering his attitude towards the Amendment. It may be—indeed, I suspect that it is—that the right hon. Gentleman had to tighten the categories and increase the net yield to give himself a margin for error in view of his experience in drafting various pieces of legislation which he has brought forward in the last two years and which have made him realise that he must accept a great many amendments which inevitably reduce the yield from his proposals.
    Nevertheless, the calculation which he has made of what he would require to withdraw from the economy this autumn and winter has, I suggest, changed a good many times. When he originally presented us with this tax in his Budget statement there was no indication of his intention to exact this £500 million forced loan between the autumn and next spring. There was an indication that the demand pressures on the economy might be expected to rise during the autumn and winter, but this was because of Government spending. Yet it is not Government spending which the right hon. Gentleman is proposing to cut back but, presumably—as my hon. Friend the Member for Oswestry (Mr. Biffen) and my hon. Friend the Member for Chelmsford (Mr. St. John-Stevas) pointed out—private manufacturing investment.
    The Chancellor intervened during the remarks of my hon. Friend the Member for Yeovil (Mr. Peyton) and said that the tax had nothing to do with the level of bank advances. [Interruption.] That was my understanding of the right hon. Gentleman's intervention. He said that the two were separate matters. The inference behind his remark presumably is that the £500 million of forced loan to be extracted this autumn and winter will not need to be financed out of bank advances and will, therefore, be financed by industry in one of three ways; first through prices being increased, but not to the extent that would be required to cover the cost of the net yield from this tax, but to the extent that it would be required to cover the gross cost during the five months before the repayments are made, secondly,—alternatively, or at the same time—that industry should pay off its employees to the extent that might
    1308
    be required to enable it to meet this £500 million forced loan, or, thirdly that industry should reduce manufacturing investment to that extent. But in each case, it would happen to a far greater extent than would be justified by the £240 million which the Chancellor has estimated would be taken out of the economy in a full year.
    That is the inference to be gained from what he said. However, I do not believe that that was what he intended. I believe that he was originally calculating that it would be possible for at any rate a substantial part of this forced loan to be financed by increases in bank borrowing. The right hon. Gentleman said that the banks were not quite up against the ceiling. However, two weeks ago he said that they were. When we were debating Clause 15, the right hon. Gentleman said that the banks were right up against the ceiling imposed by the 5 per cent. increase. He said:
    "At present, there is a limit on advances of 5 per cent. over 1965. … The banks are right up against the ceiling at the moment."—[OFFICIAL REPORT, 16th June, 1966; Vol. 729, c. 1855.]
    What has been happening? I suggest that the Bank for International Settlements—the central bankers—have made it clear that the 5 per cent. ceiling must not be breached and that this is the reason why the right hon. Gentleman feels that he must extract this £500 million forced loan from industry and why he can give no undertaking, although he has been pressed time and again to do so, to ease the banks' ability to lend when this forced loan comes into operation.
    The Chancellor was rather indignant when my right hon. Friend the Leader of the Opposition accused him the other night of putting the economy into three-monthly convulsions. Taking £500 million out of industry between this autumn and next spring and then paying back £300 million of it is putting the economy into convulsions, and I cannot see, because of that, any good reason why the Committee should not accept the Amendment which was so admirably moved by my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod).
    7.0 p.m.
    Sir D. Glover: I am indeed grateful to the Chair for calling me so early in this very important debate. Plenty of other

    1309
    hon. Members wish to speak and there will be more, because this is a very important matter and it is right that the Committee should probe it right to the roots.
    I support this Amendment very strongly. I support it because I have not been able to find in this Committee any hon. Member of the party opposite, any hon. Member of the Liberal Party or of the Conservative Party, who has a good word to say for this tax. The Chancellor had better realise that he has very little support for it his own side of the Committee——[HON. MEMBERS: "NO."]——not for the principle of a tax of this sort, but for the way in which the present tax is expected to operate. That is why it is absolutely vital that in this Committee we should give the Chancellor additional time to think about the tax before it begins to operate.
    A great many of my hon. Friends have talked about a forced loan. The way in which the Chancellor is running the tax makes it not only a forced loan but a capital levy, because even on 6th February next year only part of the impost will be repaid to industry, to commerce and to everyone concerned. My best calculations are that the tax will probably be paid back at three-monthly intervals for ease of administration. That means that the Exchequer will have taken from the people the best part of £300 million which will have been taken permanently and which will never come back into their coffers until the tax is repealed. We have to realise that there is a very definite element of capital levy in this tax.
    Another reason for accepting the Amendment is that the Chancellor said this afternoon that he was not concerned about bank arrangements. He said that he would try to arrange that the banks would give accommodation for this levy. It is all very well talking about the great tycoons of industry. The hon. Member for Oldham, West (Mr. Hale) said this afternoon that when the Chancellor realised that the tax would cost the National Coal Board £20 million he made arrangements to see that it would not cost the Board £20 million. That was what I understood from the interchange which went on. Probably the National Coal Board can get finance from the Banks, but what about horticulturists in
    1310
    my constituency? What about small traders? These people probably already have overdrafts up to the hilt and have all that the banks are prepared to give them.
    The banks certainly will not increase overdrafts simply because it would be nice for the Chancellor to receive his tax, but if these people do not have an overdraft, what is their legal position? If they do not pay this tax they are criminals. If they do not pay this tax they have to go to gaol, but where can they get the money to pay the tax? Do not my horticulturist constituents have to buy seed for next year? September to February is not a period when most people are selling produce but when they are planting their seedcorn, seeds for their tomato crops and their lettuces. It is the time of the year when money is going out, not when money is coming in.
    I do not think that the banks will give more facilities, but these people are expected to find extra money to pay to the Treasury, with no loans. When February comes they will not get all the money back. They will always be about three months in arrear. Therefore, these people in a small way will have a smaller amount of capital on which to work their businesses than they had in the past, they will find it more difficult to be efficient. They will find it more difficult to put in labour-saving machinery even if they weather the storm of not being able to get extra bank facilities for this five-months' gap.
    Another reason why we should accept the Amendment is that it seems that the Chancellor needs additional time to look at his own tax. The Chancellor says that manufacturing industry is in such a parlous state that it should receive 7s. 6d. a week for every male employee and 3s. 9d. for every female employee to serve as a blood transfusion to get industry on the road to expansion and increased productivity. This is a very funny way of going about it.
    Two years ago I was on the other side of the river in St. Thomas's Hospital. At that time the doctors thought that I needed a blood transfusion. For three weeks I hovered between here and there. I shall not say where "there" is because I did not know at the time when they were putting blood into my system to keep me going. That is exactly what the

    1311
    Chancellor says he wants to do to manufacturing industry. What would have been said if a surgeon had come into the ward and said, "Take a couple of pints from him"?
    That is exactly what the Chancellor is saying, that every manufacturing employer should get 7s. 6d. for a male employee as a blood transfusion, but for the next five months they will not get the transfusion and instead they will be blood doners. The blood will be taken away and they will not get it back, so they will become corpses.
    If the Chancellor believes that anyone can think that this is the sort of proposal which can come from a man supposed to be sane, this is a perfect example of why we need more mental hospitals in the country. It reminds me of the story of the chap who had a puncture and there was another chap sitting on the wall around a lunatic asylum——
    Mr. Pavitt: Mental hospital.
    Sir D. Glover: I beg pardon, a mental hospital.
    The man with the car took off the spare wheel, kicked the hub cap, and all the nuts went down a grid. He scratched his head for a moment, then shrugged his shoulders and set off to walk down the road to the nearest garage. The chap on the wall called, "Hey. What are you doing?" The motorist said, "Didn't you see what happened? All the nuts from this wheel went down the grid." The man on the wall said "I'm supposed to be mad, but I'm not stupid. Why not take one nut from each of the other three wheels and take the car to the garage?" That is what we want from the Chancellor, not this high-falutin' nonsense.
    Here is a proposal which, if he thinks about it, he will find has basically something to recommend it. The selective part of the tax is wrong. The way in which the Chancellor is doing this by a forced loan and by a forced capital levy is wrong. He is giving to the banks an increased profit of about £20 million a year for the interest which they will get on increased borrowing which will take place throughout industry and commerce. The proposals made by the Chancellor are so full of anomalies that they are
    1312
    laughable. Case after case will be quoted making absolute nonsense of these proposals. Therefore, I hope—I am serious about this—that the Chancellor will contemplate this matter even now and see that the way in which it is being done is wrong.
    We have given him an opportunity by this Amendment to bring sanity back into the proposal. By February he could evolve a system whereby he could still get his money, but not this system of collecting £1,100 million in order to have £200 million left at the end of the day. The Amendment would remove all the anomalies of forced loans, capital levies and bonuses to the banks by increased interest on increased loans. It would give the Chancellor time to remove many of the anomalies in the Bill. In the long run, he would realise that he was a very wise Chancellor to do so.
    Mr. Peter Bessell: I promised the Chancellor by signal that I would speak for only two minutes. I intend to keep that promise. The whole burden of this debate has been that there should be a delay, for the simple reason that there are a number of anomalies in connection with this tax which must be sorted out and which in any case will be corrected in time. I am certain that the comment by a Government spokesman to the effect that, as time passes, many of the rough injustices of this part of the Bill will be sorted out was true. However, this is no reason why people should suffer in the meanwhile simply because time was not taken for proper preparation of this part of the Bill.
    I call in aid just one example of an injustice which will be created by the Clause. I ask the Chancellor to give this special consideration, because it under-scores the points which have been made by right hon. and hon. Members on this side throughout the afternoon. It is the case of the small baker. A baker who has a bakery removed from his retail premises is treated as a manufacturing unit in regard to his employees in that bakery. However, many small bakers who operate throughout the length and breadth of the land with a bakery at the rear of their shop premises or attached to their retail outlet are treated differently for the purposes of the tax.
    The Temporary Chairman: I do not see the relevance of this argument to the Amendment, which deals with time.
    Mr. Bessell: If you will allow me, Mr. Steele, I will relate it, as I am in fact doing, to the whole point of the Amendment. My point is that this is a real injustice which will be inflicted on this section of the retail trade and that, if the Chancellor had the time at his disposal, he would correct such injustices. This has been the burden of almost every speech made today. Many examples have been quoted to underline this point.
    I do not believe for one moment that the Chancellor wishes this tax to act unfairly or unjustly. I have far too much respect for him, both for his integrity and for his desire to design an equitable tax system, to believe that. If he had the time, many of these anomalies would be corrected. Indeed, he has already corrected anomalies in the case of agriculture, horticulture, and other industries. I ask the Chancellor to look very carefully at this Amendment and see whether, in the interests of our economy as a whole, there would not be great wisdom in allowing this postponement so that the necessary alterations, which cannot and will not be made during our debates on the Bill, can be made.
    Sir John Foster: The arguments in this debate have fallen into two categories. One argument has been that this is a bad tax and that by postponing the date when it comes into operation the Chancellor may improve it. Those who have advanced this argument have verged on being out of order. The other argument, which I conceive to have been well within our rules of order, has been to urge the Chancellor that, if he postpones the introduction of the tax, certain injustices will be made less onerous.
    I urge the Chancellor to consider the case of fixed-price contracts, where this extra increase in cost cannot be absorbed. At one end of the scale there are the big engineering contracts, where the profits may be squeezed or even abolished. If it is a labour intensive contract and this tax applies, the whole profit would disappear. There is no method by which the parties can rectify this, unless it is provided for in the contract.
    1314
    At the other end of the scale there is the case of the landladies. These ladies do not work for any great profit. They may not be paying any Income Tax. They may merely be making a bare living. They make arrangements a long time ahead for people to stay in their boarding houses. This extra tax will wipe out the small amount on which they hoped to live or the small amount which they hoped to save at the end of the season so as to exist through the winter.
    This injustice would be made less severe if the date of this tax coming into operation were postponed. On the whole, fixed contracts do not run for a very long period, because people are afraid of rising costs. A rising cost brought about by a tax which nobody could foresee is unlikely to be taken care of in a fixed price contract. It is not the same as an increase in Income Tax, Profits Tax, or Corporation Tax. That type of tax takes away something which somebody has made; it reduces the profits. The Selective Employment Tax increases the costs.
    I ask the Chancellor to bear this very much in mind. He could deal with it by tabling an Amendment later. However, there seems to be no hope of his doing so. He should consider helping the considerable number of people who depend on the profits they make at least to remain profits and not to be wiped out by the imposition of the Selective Employment Tax.
    7.15 p.m.
    Mr. Callaghan: I rise to ask the Committee if it thinks that it would be reasonable to proceed to a Division now? We have had a debate lasting more than three hours on the Amendment. I readily accept that this is an important Amendment. I hope that we have now reached the time when we can vote on what is the proper date. It has been a little difficult for hon. Members to separate the question of repayment from the question of payment. I admire the ingenuity with which it has been done on some occasions. I will try to steer clear of the difficulty and keep in order, but I recognise that the questions of repayment and payment are clearly related and that a person's attitude to the question of payment will depend upon whether he is to be repaid.

    1315
    The right hon. Member for Orkney and Shetland (Mr. Grimond) referred to many of his constituents who have been beleagured by a strike for the last six weeks. He asked what their position would be in the matter of bank advances. Perhaps I should say now that it is the general rule, as the right hon. Member for Enfield, West (Mr. Iain Macleod) will know, that the Government give general guidance through the Bank of England to the joint stock banks, and it is for the banks to interpret the detail of that guidance.
    Therefore, it would not be proper for me to express a complete view on this, but 1 am sure, from my close contacts with the banks, that there would be every expectation that they would clearly give special consideration to the people of the Orkneys and Shetlands in this matter, in view of their experiences over the last few weeks. The right hon. Gentleman will understand that I cannot take unto myself the responsibility for saying that, except to say that from my general experience I am sure this will be true. I think that it would be the desire of the Committee that it should be so in the case of the approach of the banks.
    The hon. and learned Member for Darwen (Mr. Fletcher-Cooke) said that people are being asked to make an interest-free loan to the Government and that it is reasonable that, if they are to get their money back, they should receive interest on it. Manufacturers will receive a premium of varying descriptions. One of the reasons for the premium was to avoid loading manufacturers with any additional costs. It has been one of my strong desires in the course of the Budget to avoid loading manufacturing industry as far as possible. On any normal analysis of a company's liquidity, it will be found if its borrowing requirements are set against the manufacturing premium it will receive that the company will be very much on the right side in this matter.
    Therefore, although I would not acknowledge the principle that people should get interest in respect of their loan, nevertheless I think that in the case of those who will get the premium there is no doubt that they will be able to put one calculation against the other and find that they are still in on the result. I hope
    1316
    that this premium will, therefore, cover any element of interest payments.
    My hon. Friend the Member for Oldham, West (Mr. Hale) raised the matter of the position of co-operatives, as did other hon. Members. I am sorry that I was not in the Committee when my hon. Friend spoke, but I had to leave for a few minutes. I agree that delay would help them put off the evil day. That would be true for any taxation at any time—the longer we can put it off, the less we have to pay. But I cannot regard that as an overwhelming reason for deferring the introduction of the date.
    The hon. Member for Worcestershire, South (Sir G. Nabarro) expressed the view that this was an inflationary and not a disinflationary tax. I thought that his views about the attitude of manufacturers was very interesting. I would not like to say whether he is right or wrong—time will show—but I have always reckoned that there would be an element of higher prices in this and, indeed, I have said so right from the beginning. It would not be completely so because a number of people intend to absorb the price increases as far as they can, and in so far as that yields an extra degree of efficiency, we should all be grateful for it.
    As to the basis of calculations which the hon. Member asked me about—he is not here, but I can put it on record now—I am estimating roughly on a gross yield for 1966–67 of about £600 million and repayments of about £300 million or so, which gives the £315 million. I am not giving it precisely here because it is not possible to do so.
    The hon. Member for South Angus (Mr. Bruce-Gardyne), I thought, made my case for me on this question of giving guidance to the banks. He said, "The Chancellor told us a fortnight or so ago that the banks were right up against their ceiling. Now the Chancellor has said that they are not up against the ceiling. What is happening?" I can tell him that that is the way bank advances tend to go and that is one reason why it would not be very sensible at this stage to say what release of pressure would be needed on the banks in September.
    I suppose it could be said in one way that I have not made up my mind. It would be rather foolish to make up one's mind in advance of the event when the

    1317
    pressure of bank advances and of deposits—I watch the situation very carefully—varies so rapidly. This is the reason why I am saying that we must wait and see how the situation develops, while remembering that it is important for a number of companies to know as soon as they can what the position is.
    I have made specific inquiries about this, and I give this assurance to the Committee. I am told that there are some companies which will soon begin to want to know. The pressure is not yet on the banks to know. Therefore, I would think it sensible to defer a final decision on this until the pressure is there and until people really do want to know what the position will be.
    The hon. Member went into a great many fantasies about the Bank for International Settlements. I will not pursue his line of thought. I know that frequently he has to produce 1,000 words, which I read carefully and with great profit from week to week, and no doubt it will be pursued there. When one has to do that, one has to spin one's fine-spun webs, but it does not particularly relate to the truth.
    The hon. Members for Bodmin (Mr. Bessell) and for Cornwall, North (Mr. Pardoe) both made the same point from the Liberal benches. But deferring the date of introduction, with respect, does not defer the time for consideration. We are considering the matter now and deciding at this moment when these dates of introduction should be.
    Without getting out of order, Mr. Steele, I should like to trench on the ground for half a second as to the making of changes. As the hon. Gentleman knows, a Bill which we are shortly about to consider makes provision for changes to be made by order, and that is the moment at which we can consider that matter. I have no doubt that the Minister of Labour and the Treasury will want to consider what changes should be made. But that is the moment when we do that, and not here and now, in relation to the coming into force of the tax, for the reasons which I gave when I followed the right hon. Gentleman at the beginning of the debate.
    Mr. Rees-Davies: Does the right hon. Gentleman then take the view that it is open to him with his colleagues to con-
    1318
    sider whether, under the other Bill, one would be able by order to delay the introduction or operation of the tax in part, if not in whole, in relation to the whole of the hotel and catering industry that is profoundly affected by introducing this tax on 5th September rather than at the end of the season?
    Mr. Callaghan: I would not have thought so for a moment. I would have thought that, once the Clause has been passed, that is the date of the operation of the tax for all industries and all services, and that whatever happens under the other Bill is a matter for providing for repayment and not for delaying the introduction of the tax. That would be my understanding of the situation.
    The hon. and learned Member for Northwich (Sir J. Foster) referred to some points about fixed contracts. He may remember that I made a statement about that in winding up another debate last Thursday in relation to the attitude of the Government towards their contractors, and I hoped that local authorities would follow the same line. As to contracts between private individuals, it would not be within my power to intervene in a matter of that sort. But at least we have given the lead.
    Sir J. Foster: Does the right hon. Gentleman realise that this is a great injustice where there is a contract between two individuals? One cannot absorb the tax by greater efficiency. One cannot absorb it because it wipes out the profits. Therefore, the person will suffer loss through no fault of his own. Will the right hon. Gentleman say that he recognises it is an injustice?
    Mr. Callaghan: Yes, because of the special elements of the Selective Employment Tax. It is for that reason that the Government have given the lead they have given in this direction. Normally, one does not expect to make allowances for increased taxation, but in this case we have exceptionally done so in the matter of renegotiating contracts.
    I do not think that I can go further on private contracts. I will not speculate further on the matter. I know the right hon. Member for Enfield, West wishes to make some comments now, and I will, therefore, resume my seat, expressing the hope, if I may, that we should now reach a decision on this Amendment.
    Mr. Rees-Davies: Before the Chancellor resumes his seat, may I point out that he has not said a word about one immensely important question. Here comes this tax on 5th September which affects the whole of the tourist industry. Why cannot this be put back a month or two? All of these contracts have been fixed price contracts throughout. We have this picture today in which nothing is done and in which everybody who has paid for his holidays this summer will expect to get them at the same rate. We have this picture in which they do not know where they are and industry itself does not know where it is. The Chancellor has not dealt with this problem at all.
    Mr. Callaghan: I fear that I have not. I did not hear the hon. Gentleman's speech. I really would not find it possible, with regret, to defer the operation of the tax for the hotel industry. It is based upon the National Insurance stamp. This is the basis of the administration. Because it is based like that, nobody in the Ministry of National Insurance can say who is putting the stamp on. So it would mean deferring the date of the introduction of the tax for all sectors of industry—[Interruption.] I know that that is the view of the Opposition; they say, "Why not defer it?" For the reasons that I gave when I made my initial speech, I cannot entertain that argument.
    7.30 p.m.
    Mr. Iain Macleod: In two or three minutes, I shall advise my right hon. and hon. Friends to divide on this Amendment. The Chancellor's soothing manner hides the fact that he has been utterly inflexible in his attitude to the case which we have put. It has been powerfully supported by my hon. Friends and from the Liberal benches. The Liberal and Conservative Parties have any amount of things to differ about, but we can say that, although there may be certain differences on some Amendments, in our attitude towards the Selective Employment Tax the Liberal and Conservative Parties have been taking, and, I presume, will continue to take, much the same mind.
    The Chancellor knows, also—I do not want to comment, because we are more interested to see what they do rather than what they say—what the Co-operative Members of the Committee feel about this
    1320
    Amendment. I think that no single body in this country would gain more from the Amendment than would the various co-operative societies in all our constituencies. The time for brave words is over. The time for action has come. If we are to believe what they have said—it is up to them—the time for action from Co-operative Members has come.
    I moved the Amendment on two grounds. First, I said—everyone agrees that this is so—that we need more time. This is why I suggested that the two Bills should come more closely together in time so that many of the absurdities which have been highlighted in previous debates and today by my hon. Friends and by Liberal Members could at least to some extent be put right. The Chancellor yielded nothing in this. Nor did he attempt to explain why either it could not be started later than 5th September, or why refunds could not begin earlier than an unknown date in February.
    On the second point, the question of liquidity generally and bank advances, we have over and over again impressed on the Chancellor the necessity of knowing at the earliest possible date where one is. I think that he agrees with this in his heart of hearts. I cannot understand why he is taking so long to make up his mind. It is essential to let industry know where it stands in relation to this tax. Every company and countless individual employers have calculations to make which depend on how their banks will treat the approaches which they will have to make to them. It is almost frivolous of the Chancellor to let us approach July in this matter without having given any indication whatever.
    On these two grounds, which have been reinforced by a considerable number of speeches to which we have had no response whatever, we must divide the Committee on this most important Amendment.
    Mr. W. T. Williams: It was not my intention to speak in this debate. [HON. MEMBERS: "Oh."] What I have to say I shall say in a few sentences. The Co-operative Party and the Co-operative Union are not playing politics in this matter. It is a matter concerning our own consciences as to how we respond to the challenge made and the difficulties with which the Co-operative movement is faced by this tax.

    1321
    The Chancellor knows, and the Government know, that the Co-operative movement and the Co-operative Members in the House regard aspects of this tax unfavourably. He knows, and the Government know, that the situation in which the Co-operative movement has been placed by the tax is exceedingly difficult. They know also that we have no intention of being used by the Opposition in order to play politics. [HON. MEMBERS: "Oh."] I have to face this mindless barracking, but I shall say what I have to say.
    We have no intention of being used by the Opposition, who, during all the years when they were in Government, were the implacable enemy of the "co-ops" and who did nothing but disservice to the movement until it suited their political purposes.
    On the other hand, it is right that not only the Committee but the country should know exactly what it is the "co-ops" intend in this matter. We have made representations to the Government, and we have impressed upon the Government our opposition to aspects of this tax in its incidence not only upon the Co-operative movement but, for we had not asked for specific or special consideration, upon the distributive movement generally. We shall continue to press the Government for consideration of the matters which seem to us to be proper. In these circumstances, it is our intention not to assist the Opposition in their politics.
    Question put, That "5th September 1966" stand part of the Clause: —
    The Committee divided: Ayes 182, Noes 127.

    Division No. 59.]

    AYES

    [7.36 p.m.

    Archer, Peter

    Eadie, Alex

    Lyon, Alexander W. (York)

    Armstrong, Ernest

    Faulds, Andrew

    Lyons, Edward (Bradford, E.)

    Atkinson, Norman (Tottenham)

    Fernyhough, E.

    McBride, Neil

    Bacon, Rt Hn. Alice

    Fitt, Gerard (Belfast, W.)

    McCann, John

    Bagier, Gordon A. T.

    Foley, Maurice

    MacDermot, Niall

    Barnes, Michael

    Ford, Ben

    Macdonald, A. H.

    Barnett, Joel

    Fraser, John (Norwood)

    McGuire, Michael

    Benn, Rt. Hn. Anthony Wedgwood

    Gardner, A. J.

    Mackenzie, Gregor (Rutherglen)

    Bennett, James (G'gow, Bridgeton)

    Garrett, W. E.

    Mackie, John

    Binns, John

    Gordon Walker, Rt. Hn. P. C.

    Mackintosh, John P.

    Bishop, E. S.

    Gourlay, Harry

    Maclennan, Robert

    Blackburn, F.

    Gregory, Arnold

    McNamara, J. Kevin

    Boardman, H.

    Grey, Charles (Durham)

    Manuel, Archie

    Booth, Albert

    Griffiths, David (Rother Valley)

    Mapp, Charles

    Bowden, Rt. Hn. Herbert

    Griffiths, Will (Exchange)

    Mason, Roy

    Braddock, Mrs. E. M.

    Hale, Leslie (Oldham, W.)

    Mendelson, J. J.

    Braine, Bernard

    Hamilton, James (Bothwell)

    Mikardo, Ian

    Bray, Dr. Jeremy

    Hamilton, William (Fife, W.)

    Miller, Dr. M. S.

    Brooks, Edwin

    Hannan, William

    Molloy, William

    Broughton, Dr. A. D. D.

    Hattersley, Roy

    Moonman, Erie

    Brown, Rt Hn. George (Belper)

    Hazell, Bert

    Morgan, Elystan (Cardiganshire)

    Brown, Hugh D. (G'gow, Provan)

    Henig, Stanley

    Morris, Charles R. (Openshaw)

    Buchan, Norman

    Harbison, Rt. Hn. Margaret

    Moyle, Roland

    Buchanan, Richard (G'gow, Sp'burn)

    Hooley, Frank

    Mulley, Rt. Hn. Frederick

    Butler, Herbert (Hackney, C.)

    Horner, John

    Noel-Baker,Rt.Hn.Philip(Derby,S.)

    Callaghan Rt. Hn. James

    Houghton, Rt. Hn. Douglas

    Oakes, Gordon

    Castle, Rt. Hn. Barbara

    Howarth, Harry (Wellingborough)

    Ogden, Eric

    Coe, Denis

    Hoy, James

    O'Malley, Brian

    Coleman, Donald

    Hughes, Rt. Hn. Cledwyn (Anglesey)

    Orme, Stanley

    Conian, Bernard

    Hughes, Emrys (Ayrshire, S.)

    Owen, Dr. David (Plymouth, S'tn)

    Corbet, Mrs. Freda

    Hunter, Adam

    Paget, R. T.

    Craddock, George (Bradford, S.)

    Hynd, John

    Pannell, Rt. Hn. Charles

    Cronin, John

    Jackson, Colin (B'h'se & Spenb'gh)

    Parker, John (Dagenham)

    Cullen, Mrs. Alice

    Jay, Rt. Hn. Douglas

    Pearson, Arthur (Pontypridd)

    Dalyell, Tarn

    Jenkins, Hugh (Putney)

    Pentland, Norman

    Davidson, Arthur (Accrington)

    Jones, Dan (Burnley)

    Perry, Ernest G. (Battersea, S.)

    Davies, Dr Ernest (Stretford)

    Jones,Rt.Hn.SirElwyn(W.Ham,S.)

    Perry, George H. (Nottingham, S.)

    Davies, G. Elfed (Rhondda, E.)

    Jones, J. Idwal (Wrexham)

    Prentise, Rt. Hn. R. E.

    Davies, Harold (Leek)

    Judd, Frank

    Price, Christopher (Perry Barr)

    Davies, Ifor (Gower)

    Kelley, Richard

    Price, Thomas (Westhoughton)

    Dell, Edmund

    Kerr, Dr. David (W'worth, Central)

    Randall, Harry

    Dempsey, James

    Lawson, George

    Redhead, Edward

    Dewar, Donald

    Lee, Rt. Hn. Frederick (Newton)

    Roberts, Albert (Normanton)

    Diamond, Rt. Hn. John

    Lever, L. M. (Ardwick)

    Roberts, Gwilym (Bedfordshire, S.)

    Dickens, James

    Lewis, Arthur (West Ham, N.)

    Robertson, John (Paisley)

    Doig, Peter

    Lewis, Ron (Carlisle)

    Robinson, Rt.Hn.Kenneth (St.P'c'as)

    Dunnett, Jack

    Lomas, Kenneth

    Robinson, W. O. J. (Walth'stow, E.)

    Dunwoody, Mrs. Gwyneth (Exeter)

    Loughtin, Charles

    Roebuck, Roy

    Dunwoody, Dr. John (F'th & C'b'e)

    Luard, Evan

    Rogers, George

    Rose, Paul

    Summerskill, Hn. Dr. Shirley

    Whitlock, William

    Rowland, Christopher (Meriden)

    Swain, Thomas

    Williams, Alan Lee (Hornchurch)

    Ryan, John

    Symonds, J. B.

    Williams, Clifford (Abertillery)

    Shaw, Arnold (Ilford, S.)

    Thomas, lorwerth (Rhondda, W.)

    Wilson, Rt. Hn. Harold (Huyton)

    Sheldon, Robert

    Tinn, James

    Wilson, William (Coventry, S.)

    Shore, Peter (Stepney)

    Urwin, T. W.

    Winnick, David

    Short,Rt.Hn.Edward(N'c'tle-u-Tyne)

    Walden, Brian (All Saints)

    Winterbottom, R. E.

    Short, Mrs. Renée (W'hampton,N.E.)

    Walker, Harold (Doncaster)

    Woof, Robert

    Silkin, John (Deptford)

    Watkins, David (Consett)

    Zilliacus, K.

    Silkin, S. C. (Dulwich)

    Wellbeloved, James

    Silverman, Julius (Aston)

    Wells, William (Walsall, N.)

    TELLERS FOR THE AYES:

    Small, William

    Whitaker, Ben

    Mr. Joseph Harper and

    Spriggs, Leslie

    White, Mrs. Eirene

    Mr. Walter Harrison.

    NOES

    Allason, James (Hemel Hempstead)

    Gurden, Harold

    Murton, Oscar

    Astor, John

    Hamilton, Marquess of (Fermanagh)

    Nabarro, Sir Gerald

    Baker, W. H. K.

    Harris, Frederic (Croydon, N.W.)

    Neave, Airey

    Balniel, Lord

    Harrison, Brian (Maldon)

    Nott, John

    Batsford, Brian

    Harvey, Sir Arthur Vere

    Onslow, Cranley

    Bell, Ronald

    Hastings, Stephen

    Osborne, Sir Cyril (Louth)

    Bessell, Peter

    Higgins, Terence L.

    Page, Graham (Crosby)

    Biggs-Davison, John

    Hirst, Geoffrey

    Page, John (Harrow, W.)

    Birch, Rt. Hn. Nigel

    Hogg, Rt. Hn. Quintin

    Pardoe, John

    Boyd-Carpenter, Rt. Hn. John

    Holland, Philip

    Peel, John

    Boyle, Rt. Hn. Sir Edward

    Hooson, Emlyn

    Peyton, John

    Braine, Bernard

    Hordern, Peter

    Pink, R. Bonner

    Brown, Sir Edward (Bath)

    Howell, David (Guildford)

    Pounder, Rafton

    Bruce-Gardyne, J.

    Hunt, John

    Powell, Rt. Hn. J. Enoch

    Burden, F. A.

    Iremonger, T. L.

    Price, David (Eastleigh)

    Campbell, Gordon

    Jenkin, Patrick (Woodford)

    Pym, Francis

    Carlisle, Mark

    Jennings, J. C. (Burton)

    Ramsden, Rt. Hn. James

    Channon, H. P. G.

    Kimball, Marcus

    Rees-Davies, W. R.

    Chichester-Clark, R.

    King, Evelyn (Dorset, S.)

    Ridley, Hn. Nicholas

    Clark, Henry

    Kirk, Peter

    Ridsdale, Julian

    Clegg, Walter

    Knight, Mrs. Jill

    Roots, William

    Cooke, Robert

    Lambton, Viscount

    St. John-Stevas, Norman

    Costain, A. P.

    Lancaster, Col. C. G.

    Sharples, Richard

    Craddock, Sir Beresford (Spelthorne)

    Langford-Holt, Sir John

    Smith, John

    Cunningham, Sir Knox

    Longden, Gilbert

    Steel, David (Roxburgh)

    Dance, James

    Loveys, W. H.

    Tapsell, Peter

    Davidson,James(Aberdeenshire, W.)

    Lubbock, Eric

    Taylor, Sir Charles (Eastbourne)

    Deedes, Rt. Hn. W. F. (Ashford)

    McAdden, Sir Stephen

    Temple, John M.

    Dodds-Parker, Douglas

    MacArthur, Ian

    Thatcher, Mrs. Margaret

    Eden, Sir John

    Mackenzie, Alasdair(Ross&Cromarty)

    Turton, Rt. Hn. R. H.

    Elliot, Capt. Walter (Carshalton)

    Maclean, Sir Fitzroy

    Wainwright, Richard (Colne Valley)

    Elliott, R.W.(N'c'tle-upon-Tyne,N.)

    Macleod, Rt, Hn. Iain

    Walker, Peter (Worcester)

    Fisher, Nigel

    McMaster, Stanley

    Walker-Smith, Rt. Hn. Sir Derek

    Fortescue, Tim

    Maddan, Martin

    Ward, Dame Irene

    Gibson-Watt, David

    Mathew, Robert

    Weatherill, Bernard

    Glover, Sir Douglas

    Maude, Angus

    Webster, David

    Goodhart, Philip

    Mawby, Ray

    Whitelaw, William

    Goodhew, Victor

    Maxwell-Hyslop, R. J.

    Wills, Sir Gerald (Bridgwater)

    Cower, Raymond

    Mills, Peter (Torrington)

    Winstanley, Dr. M. P.

    Grant, Anthony

    Mills, Stratton (Belfast, N.)

    Younger, Hn. George

    Grieve, Percy

    Miscampbell, Norman

    TELLERS FOR THE NOES:

    Griffiths, Eldon (Bury St. Edmunds)

    Mitchell, David (Basingstoke)

    Mr. Peter Blaker and

    Grimond, Rt. Hn. J.

    More, Jasper

    Mr. Reginald Eyre.

    Munro-Lucas-Tooth, Sir Hugh

    7.45 p.m.
    Mr. Hugh Jenkins: I beg to move Amendment No. 17, in page 48, line 19, after "amount", to insert:
    "in respect of each hour of employment".
    The Temporary Chairman: I think that it will be convenient for the Committee if we take at the same time Amendment No. 19, in line 20, leave out "twenty-five shillings" and insert "seven-pence", Amendment No. 22, in line 23, leave out "twelve shillings and sixpence" and insert "fourpence", Amendment No. 25, in line 24, leave out "twelve shillings and sixpence" and insert "fourpence",
    1324
    and Amendment No. 28, in line 26, leave out "eight shillings" and insert "three-pence".
    Mr. Jenkins: It is fortunate indeed, Mr. Steele, that you have decided in your wisdom that these Amendments should be taken together, because they are all part of a whole. Amendment No. 17 seeks to convert the tax from one levied in respect of each week of employment to one levied in respect of each hour of employment. The other Amendments are consequential. If Amendment No. 17 is carried and the tax is converted as I have described, one would hope that the

    1325
    other Amendments would be carried, because they are an essential part of it, but if Amendment No. 17 were not carried, it would be wrong for the others to follow.
    I hope that this is clear. I notice that one or two hon. Gentlemen and an hon. Lady opposite have added their names to one or two of the later Amendments but not to Amendment No. 17. The consequence of accepting those Amendments but not No. 17 would be strange, because it would reduce the tax to 7d. a week instead of 7d. an hour, and it is far from my purpose to reduce it to such an absurdity. If the first Amendment ware not carried, the later Amendments would be purely of a wrecking character, and it is conceivable that this is not entirely unknown to the hon. Lady and hon. Gentlemen opposite who have put their names to the later Amendments. I assure the Committee and my right hon. Friends that that is far from my purpose. Indeed, I supported the Government on the Amendment which has just been carried because I am not opposed to the tax in principle. What I am opposed to is the manner in which the tax is being levied. My Amendment is tabled to improve the tax and make it more sensitive.
    In what I shall say briefly in support of the Amendment, I want to say precisely why I believe that my proposal would result in a substantial improvement in the tax, and why I believe that my hon. Friends, after they have listened to my arguments and the debate, will decide to accept the Amendment and change the nature of the tax.
    The object of the Amendments is not in any way to reduce the revenue that my right hon. Friend hopes to raise. Indeed, in certain circumstances, a firm employing a number of people for more than 40 hours a week each would pay a larger and not a smaller amount of tax. This would, incidentally, discourage overtime, because the rough division I have made, to the nearest penny, would provide that the tax would become payable on an hourly payment relating to a 40-hour week. Thus, in respect of any employee working more than 40 hours, the employer would pay a larger sum whereas in respect of an employee working less than 40 hours he would pay a smaller sum.
    1326
    Let us consider the advantages of this degree of flexibility. The problem of the part-time worker would be solved because his employer would pay in respect of the number of hours in which he was engaged. I have not attempted to change the fundamental nature of the tax. I have preserved the same relationship through the hourly sums that the Government have created in their weekly sums. In Amendment No. 19 the sum of 7d., which is the hourly pro rata rate, is introduced. In Amendment No. 22 the pro rata sum of 4d. is proposed in place of the 12s. 6d. in the Clause and the same applies to Amendment No. 25. In Amendment No. 28, the sum of 3d.—the nearest we could get—is substituted for the sum of 8s. These substitutions are as near pro rata as one can get in substituting hourly for weekly payments. They would not change the amount paid in respect of each week of employment. The employer engaging a man or a woman for a 40-hour week would still pay precisely the same under the hourly rate as under the weekly rate of 25s. or 12s. 6d.
    Although we are not attempting to alter the amount of revenue, the Amendments would do so incidentally because the amount paid by an employer would be on the basis of hours instead of the week. The advantage as far as part-time employees are concerned is surely immediately apparent. The great objection to the tax in respect of part-time employees has been the amount to be paid. However, it has been claimed that most of them are women and that in their case only half the tax will be payable. That does not deal with the many male part-time workers. A part-time worker is very often the man who badly needs employment. He is often a man who is not in full health or who is getting on in years and who, for one reason or another, cannot do full-time work.
    Under our proposals he would continue to be employed on an hourly basis whereas his services might well be dispensed with if the tax is levied on a weekly basis. The same applies, of course, to women as part-time employees. This would make the tax more flexible and reduce many objections to it.
    One might ask why the Government introduced this tax in its present form in the first place and I will anticipate one

    1327
    or two points my right hon. Friend the Chief Secretary may make in reply. It is conceivable—and hon. Members opposite probably think this—that the Government did not think of doing it in the way I suggest. But that is probably not the case. They may have thought of it but dismissed it, and, as I say, I want to anticipate their reasons so that I can spike my right hon. Friend's guns before he turns them on us.
    Our proposal would be flexible and have certain advantages, but I think that my right hon. Friend will say that the problem of collection could be extremely difficult. I wonder whether this is really so. Indeed, I can see some advantages. The method of collection is to be through the National Insurance stamp. Perhaps this is because the Ministry of Labour felt able to shoulder the burden whereas the Treasury was a little fussy. But if it is no more than an administrative convenience of that kind it is a pity that the decision was made on that basis.
    Another point which might have been made is that the collection on the stamp basis is rather complex. Certainly, collection on the basis of a weekly payment to the Government by each employer would be much simpler. Under my system, all that the employer would have to do at the end of the week would be to write out a cheque covering the.total number of hours worked in his establishment and send it to the Chancellor. If the Chancellor prefers it done through the Ministry of Labour, the employer could send the cheque to the Minister of Labour who could then send on a cheque to the Chancellor or make a book transaction, as we know will be done on the basis proposed by the Government. All we are doing here is to remove a certain amount of purchasing power indirectly, and exactly how we set about the process does not really matter very much.
    One of the concerns which moved me to look into this matter—others were drawn to my attention by constituents—is the problem created by theatrical employment in which there is a great deal of part-time work. People work in the evenings in order to keep theatres open and the amount of work and the size of their pay are really quite small.
    I am not talking so much of actors as of people who work backstage or in the
    1328
    box office or at the front of the theatre. Putting them on an hourly basis for the purpose of this tax would make it possible to continue their employment and, indeed, for some theatres to remain open which would find it difficult to do so if the tax were levied in full on the basis of a weekly payment of 25s. for a man and 12s. 6d. for a woman. It was this aspect which first drew my attention to the benefit of an hourly payment, but there are other reasons.
    Now I want to return to the question of collection. I see no reason why the employer should not pay in the way I have suggested. It would save a great deal of work in each establishment. Imagine the saving in a factory. Instead of having to stick on a stamp for every employee at the same time as he puts on the National Insurance stamp, which would be a great deal of extra work, under my method the employer would be able to write a cheque at the end of the week, making one simple operation in the accounting department.
    8.0 p.m.
    My right hon. Friend might ask how we could make sure that the tax was paid. I am not sure that that objection is valid. With the National Insurance stamp, the individual needs to be identified so that he can know what his own personal record is, but the individual need not be identified for the purposes of the collection of this tax. If I am right in saying that there is no necessity to preserve the individual contribution basis for the tax, that argument is destroyed. There is not the same case as there is with the National Insurance stamp. If the tax is to be collected by stamp, that is merely because that happens to be a convenient way of collecting it. It may be convenient for the Government, but I doubt whether it will be convenient for employers.
    The other possibility is the danger of people not paying the tax, of employers fiddling the amount by returning smaller numbers of employees. It might be said that the Revenue might lose a certain amount if we were to rely on my suggested method, and if it was not to do so, that might require the establishment of some sort of inspectorate. I am not sure how much there is in that argument. If it is made and if the Government say that they are wedded to the stamp

    1329
    system, there is no reason why they should not use the stamp system even on the basis of an hourly tax. There is no need to have only stamps representing a 40-hour week. There could be a 40-hour stamp and an eight-hour stamp and some one-hour stamps. The card could then be made out quite simply for the number of hours worked by the employee concerned. If the Government are wedded to the stamp system, they could introduce this hourly basis, with all its advantages, and still stick to the stamp method of collection.
    For all those reasons, I feel it desirable to urge this Amendment on my right hon. Friends. It would have the effect of making what is basically a sound tax more acceptable. That is the object of the Amendment, not, as with some other Amendments, to bring the tax into disrepute. That is no part of my feeling in the matter. I believe that the tax deserves to have a fair start. If it were to be imposed on the hourly basis which I suggest, it would become much more popular, which would give the tax a much fairer start than it would if my right hon. Friends decided to stick to the weekly method of calculation with all the anomalies which that of necessity would involve.
    Mr. Nigel Birch: Though I cannot agree with everything said by the hon. Member for Putney (Mr. Hugh Jenkins), I cannot deny myself the honour of following him into the Lobby against the Government on this Amendment. The reason is that he has touched on one of the most dangerous points of the tax economically and from the point of view of humanity. It is the question of what will happen to part-time workers.
    The hon. Gentleman was perfectly right to say that not all part-time workers are women. No doubt a great body of them are married women who can spare a few odd hours on some days of the week and who are very largely responsible for keeping the hotel industry and the retail trade going. But there are also those who are handicapped, ill, disabled or old, as the hon. Gentleman said, and not capable of working full hours. So far, the Chancellor has said that he cannot do anything about them, but unless he can, not only will costs go up very much, but a great part of the retail and hotel in-
    1330
    dustries will be badly damaged, because either their costs will go up astronomically, or they will not be able to employ these people and their business will go downhill.
    I cannot say precisely whether the hon. Gentleman's scheme will work. When the Chief Secretary replies, he will probably think of some more ingenious reasons than the hon. Gentleman himself put against the Amendment. Of course it is not the Treasury which collects the tax but the Inland Revenue, and the Inland Revenue is absolutely delighted to shuffle it off to the Ministry of Labour. It knows that the Ministry of Labour is capable of doing it, while the Inland Revenue is not and that is why it has come about in this extraordinary way.
    I support the hon. Gentleman because it must be wrong economically to bring in a measure which discriminates against part-time workers when, as has so often been said, one of the main efforts of the Ministry of Labour over the years has been to get more part-time workers, more old and disabled workers, into employment. The problem could have been solved, but one needs to spend the best part of the year working on a tax like this and no work has been done on this. That is why we have these endless anomalies. If it is any consolation to the hon. Gentleman, I shall vote for the Amendment.
    Mr. Pavitt: Like the right hon. Member for Flint, West (Mr. Birch), I support the Amendment and on very similar grounds, although I do not want to deploy most of the arguments about part-timers. This is a consideration which runs right through the Clause, but we shall have an opportunity to discuss it on a later occasion and I do not wish to develop the complete case until the time comes.
    There is no doubt that my hon. Friend the Member for Putney (Mr. Hugh Jenkins) has found an ingenious way of revising the tax which both those who support and those who oppose it would like to be more selective. One of the difficulties in any form of taxation is that there are borderline cases and that just over the boundary there is always a difficult case. That must result from the rough and ready way in which our taxation measures are often drawn.

    1331
    My hon. Friend's ingenious way of using stamps of various lands might result in something similar to the trading stamps which one gets when one purchases petrol, so that, instead of having stamp cards, people will have to have stamp books. I understand that even for the present range of part-time workers there are about 30 different varieties of stamps.
    This tax is to collected by an attachment to the insurance stamp. If the Chief Secretary can find a practical way of working what my hon. Friend proposes, the person working nine or 10 hours a week—the person working eight hours a week is now excepted—would be more equitably treated. For a person working nine hours a week, usually a female worker, the incidence of the tax at 12s. 6d. a week will represent an increase of 1s. 6d. an hour. This is a heavy impost if one is employing many people doing nine, 10 or 11 hours a week. The whole point of the Amendment is that it just brings in this very small number of those just on the borderline, doing nine, 10, 11, or 12 hours a week. For that reason, 1 would support the Amendment.
    Sir J. Foster: Let us assume for the purposes of this debate that it would be a good thing if we could allow the employment of part-time people, the disabled and elderly. Let us assume that the Financial Secretary agrees with that. I foresee that the debate will turn upon whether it is administratively possible to do this. As a result, suggestions should be made, from all sides of the Chamber, in order to enable the Chancellor to bring this about. I cannot believe that the Government Front Bench will say, "No, our object is to prevent the employment of part-time, disabled or elderly people", or, "We do not care if they are not employed".
    Starting on this basis I would suggest a slight amendment to the way in which the hon. Gentleman the Member for Putney (Mr. Hugh Jenkins) envisages his scheme would work. I would tie it in with the calculations made on P.A.Y.E. Take the case of a factory employee. One knows what his hourly wage is because the hours of work are 42 or 44 hours a week or something of that sort. One knows his basic wage and it is quite easy to divide that by the number of hours worked and reach his hourly wage.
    1332
    In the pay slips made at the end of the week one has to add his entitlement to overtime and one has to set down the number of overtime hours worked.
    I suggest that instead of relating it to a fixed 40-hour week, the accounts department of the factory, which would have to do the same sum in any event for overtime purposes, could perform the task. There could be some stamps of the main values and where there is a stamp of unusual value, for a person employed for two hours a week or four hours or seven, the stamp should have a tick put upon it by the factory showing that a separate cheque has been sent at the same time.
    There could be said to be the possibility of cheating, but the payee's slip must agree with the amount sent in and one has only to look at the payee's slip to see the hourly rate which would be paid. This would help the Ministry of Labour in checking. One would find that the 40 hours a week multiplied by 7d. was a little more expensive in certain cases. But the right hon. Gentleman's calculation is not quite right, as 40 times seven is a little less than 25s.—actually 23s. 4d. I do not believe that the Government Front Bench will say that they are glad that part-time, disabled and elderly people cannot be employed or that they do not care whether they are employed. They will have to say, "If only we could do it, we wish someone would show us how." The hon. Gentleman for Putney has shown us.
    Mr. Hugh Jenkins: Will the hon. Gentleman permit me to say that it is worked out to the nearest penny?
    8.15 p.m.
    Mr. John Fraser: I support the Amendment in principle because it will help to iron out some of the anomalies affecting the part-time worker. I am aware that in the sort of business which I practised before I came here it was possible to employ someone who comes to work for eight or nine hours a week, to make the tea in place of the secretary. By doing that one pays a fairly small but remunerative wage and is able to save the time of skilled staff. There are chemists in my constituency who employ people part-time in the evenings to dispense prescriptions and by doing this they are able to save the time of full-time staff.

    1333
    It is a pity—and this is why I support my hon. Friend's Amendment in principle—that no provision has been made for part-time workers. One would have thought that the deployment of labour would have required the encouragement of part-time workers, rather than having everyone pay the stamp at the same rate. I suspect that the reason for not being able to exempt these people is because of the limitation of the type of insurance card. I am convinced that if men and women had the same colour insurance card they would both be paying the same amount of Selective Employment Tax.
    It is only because there is a convenient distinction between one kind of card and another that one can draw the distinction between the various amounts to be paid. I know that the arguments against having some special provision for the part-time worker is that in some large industries the thing tends to iron itself out. This applies when there are full and part-time workers, but it is not true of some firms employing almost exclusively part-time workers. Thus one has the anomalous situation, if one takes the cleaning industry employing the Mrs. Mopps, about whom we have heard, in which, if the industry is a service industry, employing mainly part-time people, when the tax is very much a poll tax on labour costs, the industry will be paying a fairly high rate of tax in proportion to the amount of wages which the cleaning women receive.
    On the other hand if a large factory in a manufacturing group employs its own cleaning labour, it will receive a premium and, by extending some concession to the part-time worker, it is not going to cost anything—because some money will be lost by manufacturing industry in that it will lose some premium for its part-time workers and something may go to the service industries because it will not have to pay quite so much.
    I said that I was in favour of the Amendment in principle, but I am against it in practice because it would be unworkable. Let us assume that hon. Members were classed as employed persons liable to pay the tax. It would be an extremely difficult thing for the Paymaster-General to be running round this House in the early hours of the morning working out how many hours each Member had worked. I mention
    1334
    hon. Members as an illustration of the difficulty in working out the number of hours everyone has worked in order to calculate the rates. I know that my hon. Friend the Member for Putney (Mr. Hugh Jenkins) is interested in the theatre. It might provide some incentive to various playwrights to write plays of an hour in length so as to save the amount of tax payable upon those working in theatres.
    There is a very real practical objection to working to an hourly basis. I would like to suggest a method capable of being able to deal with a part-time worker, which, at the same time, does not create the enormous administrative difficulties which would arise in the case of the Amendment proposed by the hon. Member for Putney. It is proposed by the Treasury that the tax should be collected by an extra payment of the National Insurance stamp. I cannot see why it has not been possible to use the graduated pension system. When sending graduated pension contributions one would add on the employer's side 25s. per week for a male and 12s. 6d. for a female.
    It would be just as easy to calculate the tax in this way, but one could make exemptions and say that where someone earned less than £4 or £5 a week the amount to be paid on the employer's side of the graduated contribution section of the P.A.Y.E. card would only be one shilling a week. Operated in that fashion one would be able to cope with the part-time workers, with people working 16 or 20 hours a week without creating administrative difficulties suggested by my hon. Friend's Amendment. It would get round the problem in a perfectly simple fashion and I hope that this suggestion might commend itself to my right hon. Friend and lead to a middle way between the points of view expressed.
    Sir D. Glover: I support what the hon. Member for Putney (Mr. Hugh Jenkins) has said. I do not believe that his proposals are such that the Treasury could accept them in their entirety, but they are another argument why the Government should have accepted the previous Amendment which proposed that this tax should be postponed until February. I am sure that the Government have not given nearly enough

    1335
    thought to the problem of part-time workers. I was impressed by what the hon. Member for Norwood (Mr. John Fraser) said. I realise that there are many difficulties about the proposals of the hon. Member for Putney, but the Government should do something, not in the distant future, but now, about the problem of part-time workers.
    The hon. Member for Norwood mentioned the question of firms which employed Mrs. Mopps. Under the Government's proposal, a firm in Liverpool employing a lot of Mrs. Mopps on contract in cleaning the Ford factory at Halewood will form them up on parade outside the factory and have to pay 12s. 6d. for each one, although the ladies who work in that factory probably do not work more than 15 or 20 hours a week. The employer then says, "Ladies, I am very sorry, but owing to the Government's stupidity I am now going to give you the sack."
    The ladies will then walk through the doors of the Ford factory where they will be signed on by the Ford company, which will get a premium of 3s. 9d. for each of them. They use the same mops, the same buckets, the same taps; they clean the same floors and the same windows. They do exactly the same job they have been doing for years. The difference to the State is this. If they are employed by an outside contractor, the State gets 12s. 6d. a week for each. If they are employed by Ford's, the State pays 16s. 3d. to Ford's for each, a difference of 28s. 9d.
    The Government must realise that any system which produces that sort of anomaly is crazy. It is not the economics of Socialism; it is the economics of Bedlam.
    Take the retail distribution trade. An enormous number of shops employ women part-time on Friday afternoons, which is the busy time of the week, and Saturday. They may do 12 hours a week, for which the firm has to pay an on-cost of 12s. 6d. on their pay. If the woman is getting a little old, or has become less efficient, she gets the sack. Yet the Ministry of Labour has been working for years to try to get exactly that sort of person into employment. It cannot be right that the State should ask
    1336
    the firm to pay the same amount in tax in respect of a girl or woman working 12 hours a week as it pays in respect of full-time staff working 40 hours or more a week.
    The hon. Member for Putney probably accepts that the Government would not accept his Amendment in its entirety. What he is disturbed about is the anomalies. He wants to bring more common sense and a more practical approach to the Bill. The hon. Member for Norwood wants to do exactly the same thing. We must ask the Government to consider this problem again. Although the tax will operate from September, it is not too late for the Government to say, "We have been impressed by the arguments about part-time workers. We have heard what our hon. Friends the Members for Putney and Norwood have said. We realise that there is a problem and we will introduce an Amendment on Report which, even if it does not go the whole way, will go a long way in removing anxiety."
    This Amendment, oddly enough, is an all-party Amendment. It will not bring down the Government if it is accepted. Since the Government's proposals on part-time workers are complete and utter nonsense, I hope that the hon. Member will press his Amendment to a Division. I will support him, not in trying to bring down the Government, but in trying to introduce a little common sense into this tax in dealing with the segment of the population with which the hon. Member is concerned.
    Mr. Norman Buchan: Timeo Danaos et dona ferentes. When hon. Members opposite say that they will follow us into the Lobby on the principle of a Clause and not because of their objection to the principle of this tax, then I for one am very wary. I support my hon. Friend the Member for Putney (Mr. Hugh Jenkins), first, because I always support him; secondly, because I think his arguments are irrefutable; and, thirdly, because I notice that my name is on the Amendment Paper along with his.
    There are those of us who approve of this tax because it is a correct measure, a Socialist measure. Perhaps the hon. Member for Ormskirk (Sir D. Glover) does not agree, but basically it is a Socialist measure. However, it suffers

    1337
    from the gross defect of a lack of selectivity because it is far too blunt. My hon. Friend's Amendment is an attempt to refine the instrument, to make it more selective. In this year and age, we cannot leave merely a division between service and manufacturing industries. We must look at things a little more closely. The trouble with the tax, and indeed with all taxation, is that it is considered in the light of the efficiency of the country and of raising revenue and not also in terms of the graces of life.
    The arts, theatre and music, will be affected by the tax. It is true, as my hon. Friend the Member for Putney said, that with the full-time actor working 40 hours a week, or whatever he does, there will not be much variation. But we think of all the services which are necessary not only to make the theatre function, but to make it function in a comfortable and graceful fashion. Many of the services are given on a part-time basis. The same is true in the field of music. This tax will have the tendency of reducing the number of part-time musicians who help to add grace—and fulfil a necessity—to our lives.
    An hon. Member opposite referred to the mentally handicapped. But there is another serious issue with me because, as hon. Members will know, the Erskine Hospital for War Disabled is in my constituency. One of the tasks which frequently faces me at my "surgeries" is to see how one can bring some aim and purpose into the lives of people disabled in various ways, and one of them is to try to get them part-time jobs. Anything that we can do in this direction through taxation or any other method will be useful. For this reason, too, I support the Amendment.
    Along with this is the question of the retired. Again, we should be giving more and more attention to the "graces" of life. This has nothing to do with efficiency, but concerns, perhaps, the nature and quality of the life we lead. One of our jobs with so many people is to fit them into part-time work, where they can be useful and where they feel that they are useful, so that they can spend their days with some kind of dignity partly because they feel that they are being useful. My hon. Friend's proposal would help in this way.
    1338
    I am too long in the tooth to think that a discussion based upon the graces and the quality of life brings much conviction to bear upon the Treasury. The argument of efficiency is the rock on which we always falter. My hon. Friend the Member for Putney pointed out, however, that far from losing revenue the Treasury would, by his proposal, gain productive revenue in the sense not only that overtime payment would make a bigger contribution to the revenue but because efficiency would also begin to be sharpened.
    For far too long, many of our workers have been looking at their wages based upon their assessment of their basic wage plus overtime. It is conceivable that the low standard of wages in this country, together with the question of overtime, has been the crux in the seamen's struggle. I certainly want overtime—we are trying to boost exports—but I want it to be efficient and not inefficient overtime. I believe that the workers want the same. Therefore, my hon. Friend's proposal would tend to cut down the unproductive and inefficient overtime by making employers look at it twice.
    I did not imagine when I began to speak that I have so many arguments in favour of this Amendment to put forward. We seem now, in this Amendment to be moving towards the much fairer method of a payroll tax plus an added selectivity by bringing in the basic division between services and manufacturing industry. I ask my right hon. and hon. Friends at the Treasury to go down in history by adding yet another grace and bringing in the extra refinement proposed by my hon. Friend.
    I agree that the form of the tax is deliberately simple. We are using an existing classification which bears the stamp of the Ministry of Labour. It should not, however, be beyond the ingenuity of my right hon. Friend the First Secretary and the Chancellor to devise a scheme on the lines put forward by my hon. Friend the Member for Putney. The Government Front Bench will not be so modest as to imagine that they cannot bring forward such a scheme. The solution could follow the totalling of hours each week and the payment of money in relation to that number of hours. This would solve the problem. I urge the Government Front Bench not to put my hon. Friend the Member for Putney in the

    1339
    embarrassing position of having to accompany the hon. Member for Ormskirk through one of the exits of this Chamber, but to accept the Amendment.
    8.30 p.m.
    Mr. Gower: There must surely be something wrong with a Bill which treats a full-time employee for the purpose of this tax in virtually the same way as a part-time employee or a partially disabled person—one, for example, who is blind. The Chief Secretary and the Government generally must be disturbed at the obvious deep misgivings, which are shared on both sides of the Committee and outside Parliament, about the consequences of the Bill in its present form on the future employment of persons in part-time employment, and the disabled in particular.
    I listened with care and sympathy to the hon. Member for Putney (Mr. Hugh Jenkins), because he was suggesting a possible partial solution. I agree with the hon. Member for Norwood (Mr. John Fraser) that it obviously would not cover all persons in employment, some of whom are paid by other methods. Obviously, however, it would cover the classification of people who are employed on an hourly basis, who represent a quite large proportion of those who are employed. In that way the Amendment would go a considerable way to meet that difficulty.
    The Chief Secretary will have some fairly powerful technical objections to the Amendment in its present form, but unless he can deal with the arguments of principle I, like a lot of other hon. Members, will have to follow the hon. Member for Putney into the Lobby. I am sure that he will divide the Committee unless the Chief Secretary can give us an assurance on the matter of principle.
    There is anxiety. It could not be otherwise. Reference has been made to the employment of Mrs. Mopps, the people in the cleaning industry. The only consequence of the Government's proposal can be that either these people will not be employed in such numbers or that the cost of the work they do will be considerably greater. If I were getting work done by cleaners and they were affected by this tax, as they must be, I should not expect to have the cleaning
    1340
    done at the same price. It would not be feasible.
    In the long run, the person having to pay such a high—almost a poll—tax for each person in that category would be obliged to employ people who were able to do full-time work. I hope, therefore, that the Chief Secretary will be able to give a satisfactory answer on the argument of principle. I certainly would not expect him to accept the Amendment in detail. An interesting variation to it was suggested by my hon. and learned Friend the Member for Northwich (Sir J. Foster). Obviously there is ample scope for further variation and the Chief Secretary must surely respond to us on the argument of principle. Otherwise we must divide against the Government.
    Mr. Nicholas Ridley: I, too, shall have pleasure in following the hon. Member for Putney (Mr. Hugh Jenkins) into the Lobby, though whether he will lead us from in front or behind, like the Duke of Plaza Toro, remains to be seen, but I will be in his army if he goes there.
    The Amendment he has proposed certainly deals to some extent with the problem of the part-timer, one of the most glaring examples of injustice in this Bill, and I, indeed, have many constituents who would greatly benefit. I am thinking particularly of home helps and the part-time agricultural workers, whose employers would pay a small amount of tax if the Amendment were carried as it now is, rather than the full 25s., and this, I think, is the very great advantage of the Amendment.
    But in some senses it does not go as far as it should. I do not believe that it is a simple way of basing the tax. I think pence per £ is a rather complicated way to work it out and a difficult way to levy it. With respect to my hon. and learned Friend the Member for Northwich (Sir John Foster), when he tried to explain the method of collection I found myself at times not entirely following him, I must say. I do not think it could be called simple or easy to collect.
    The hon. Member for Renfrew, West (Mr. Buchan) called this a Socialist tax. What an extraordinary idea. It seems to me that this is a flat-rate tax. It is not Socialist at all. It is not progressive at all. One pays the same 25s. if one

    1341
    employs a labourer for eight hours and if one employs the top financial brain in this country for a whole week; it makes no difference; it is not progressive. Surely, the whole point of this tax ought to be that for the use of scarce and skilled people one should pay more tax; but if one uses unskilled people for a few hours a week one should pay very little tax. It should be an incentive to economy in the use of labour and skill of all sorts, not just a flat-rate, blanket tax as proposed by the hon. Member.
    Lastly, the other objection to this tax, I think, is that it is not inflation proof. Seven pence an hour may be a derisory sum of money after this Government have been office a few more years—hardly worth paying: if one has to go to get one's wages in sacks as a result of prolonged and uncontrolled inflation 7d. an hour will be so insignificant it will not be worth paying. Of course, it should be a percentage of wages or earnings paid, and this, in my opinion, is the only conceivable and sensible way of collecting a tax of this sort.
    I should like to see the tax developed and added to along the lines of the hon. Member's Amendment and along the lines I have suggested. I should like to see it replace Income Tax in the lower ranges of income altogether—below, shall we say, £1,500 a year or something of that sort? I am shocked, if I may say so, at the enormously small percentage of our tax revenue collected by means of employment taxes, through the stamp and now through this tax which is proposed. We in this country collected by this means only 13·8 per cent. of total revenue, whereas in Germany it is 28 per cent. and in France it is 35·5 per cent. These figures show how much greater reliance we place on direct taxation, and how far too little reliance is placed on the other forms of taxation.
    It is interesting that in France, tax is 50 per cent. on labour and in Holland it is 23 per cent. on labour, whereas at the present time, on an average wage of over £18, one only pays 7½ per cent. in this country. If the Clause goes through as it is proposed, that will rise to 14 per cent. when the Selective Employment Tax has been paid; but, for those who receive the premium, it will
    1342
    fall back again to 5·3 per cent. on labour. I suggest that the figure of 5·3 per cent. on labour shows that the Government are attempting to collect their tax on an entirely wrong basis.
    I would like to try to solve the difficulties of collection which hon. Members have referred to and to which the Chief Secretary will doubtless refer when he catches your eye, Mr. Irving. Of course, it is difficult to collect either the 7d. per hour tax, a percentage tax or any other form of tax than the flat-rate tax which the Government have put forward. But that is an argument for not putting forward the tax until the system of collection has been arranged.
    It is ridiculous to bring in the wrong tax just because one has not thought far enough ahead to arrange a system of collection which is viable, fair and sensible. In my opinion, the insurance stamp itself should not be on a flat rate. We should go to a percentage basis of collection for all taxes on labour, whether they be to cover unemployment, health, pensions or straightforward tax as we are discussing in this case.
    The Government have made a fatal mistake in trying to bring in a tax, which is in some ways not ill-conceived, before bringing into being the machinery which would be required to collect it on a fair, sensible and equitable basis. The anomalies which have been mentioned by my right hon. and hon. Friends will become more and more of a nightmare to the Chief Secretary during the coming months.
    This Bill and the Ministry of Labour one which we are to discuss will take many weeks to get through the House, and he will rue the day when he supported the Chancellor in bringing forward a tax which had not been thought out, for which the machinery for collection was not in existence and for which the machinery for paying back the premiums was not in existence, either.
    The anomalies are so frightful that the only way we can salvage the principle, for which the whole Committee has some sympathy, is for the Chancellor to withdraw the tax now, get his machinery right and bring it in again next year on the basis of what the Opposition have been suggesting.
    Mr. R. J. Maxwell-Hyslop: It will be noticed that I have joined with the hon. and bearded Member for Putney (Mr. Hugh Jenkins) in sponsoring the Amendment——
    Mr. Hugh Jenkins: Mr. Irving, is it in order for hon. Members to refer to each other's facial characteristics? If so, I shall refer to the hon. Member for Tiverton (Mr. Maxwell-Hyslop) as "the hon. and unbearded Gentleman".
    Mr. Maxwell-Hyslop: We can settle for that difference, though I hope that we shall have in common support for the Amendment.
    In part, it removes from the tax its regressive element. It is not a flat-rate tax, as has been suggested by my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley). It is a regressive tax, because the rate of tax charged per hour increases with the small number of hours worked per week by each employee. It is an example of regressive taxation brought in by a Labour Government, and I hope that the Chief Secretary will not endeavour to persuade us to accept it as being, in some way, a progressive measure.
    It is not incumbent upon the sponsors of the Amendment to detail to the Government the mechanics under which they can collect their own tax. That is the proper function of Treasury Ministers and their professional advisers. When an Amendment is put before the Committee to get rid of anomalies, injustices, and follies in a tax introduced by the Government, it is not on the plate of the sponsors of the Amendment to determine the mechanism by which that can be done, and I imagine that this is what the Chief Secretary would say if he were sponsoring an Amendment to get rid of anomalies and injustices in a Finance Bill.
    8.45 p.m.
    What are the characteristics of the people who are engaged in part-time work? Why are they working part-time instead of full-time? Broadly speaking, there are two reasons for this, either because the employment potentialities in the area are inadequate to provide them with full-time work, in other words their employment is marginal, or because there is something in their personal circum-
    1344
    stances—they are not fully physically or mentally fit, or they have family commitments, or elderly relatives or friends to look after—which prevents them from enjoying the higher standard of living which they would enjoy if they were able to work full time. Yet these are the people who are singled out—unless of course the Amendment is accepted—for an effective rate of taxation which may well prove punitive, which may well result in them losing that part-time employment.
    As well as resulting in considerable hardship to the individual, in many cases it will not result in any significant saving to the Treasury, because the persons concerned, instead of earning income on which, in many cases, an element of tax is paid, as here, will go on to National Assistance or whatever it is called when the Bill dealing with this has been considered by both Houses.
    The loss to the Treasury as a result of accepting the Amendment would be considerably less than its face value, and the reason for this must be borne in mind. One hon. Gentleman talked about a mental hospital in his constituency. There are three in mine, and one of the major problems is that of rehabilitating people who are temporarily mentally sick, and of rendering sufficiently self-confident to stand, at least partially, on their own feet people who are born mentally subnormal and are incorrigibly mentally subnormal. Very often this starts with a form of contract labour where they go out to work under supervision. For instance, in the south end of my constituency they go out in teams to pull swedes on farms at certain times of the year. By working under supervision it is hoped that with the passage of time they will gain sufficient skill and sufficient self-confidence to be released to look after themselves without permanent supervision. This is the most marginal type of labour of all. These are the people who are most vulnerable to an unamended Selective Employment Tax of this kind.
    The Amendment would apply also to people who have no mental or physical disabilities, but who live in areas of the country where there are not sufficient opportunities for full employment. Unashamedly I admit that the West Country is one of these. Surely it is not seriously

    1345
    imagined by the Treasury Bench that people will work part time in the West Country in the morning, and in Macclesfield or Birmingham in the afternoon? Nor, I take it, is it imagined that as a result of the tax they will move to Coventry or to Birmingham where houses are not available.
    The effect of the tax will be to render it unprofitable in many cases to employ part-time labour, or, alternatively, to employ it for a certain period of the year as is done at the moment. A considerable amount of part-time labour is employed in the holiday industry, in the licensed distributive trades, and the catering trades in general. In so far as the results of the tax is to restrict activities to which the Chancellor has paid tribute as a massive earner of foreign currency—and, incidentally, a saver of currency which would otherwise be spent by British people on holiday abroad—this is contrary to another aspect of the Chancellor's policy.
    Moreover, even if the individual businesses continue to offer facilities which involve employing part-time labour, the decreasing margin of profitability will effectively reduce the proportion of the year in which it is possible to employ those people, which is neither to the benefit of the economy nor to the benefit of the individual. The benefit to the Treasury is both speculative and small. It was said by the hon. Member for Putney, with excessive charity, that he was quite sure that his right hon. Friends on the Treasury Front Bench had thought of all this before they introduced the Selective Employment Tax in the first place. Charity obviously begins at home. I do not believe that they had. This was a crudely drafted proposal.
    Mr. Hugh Jenkins: I said that I was sure that they had not the charity on the other side of the Committee. I did not say that I had it.
    Mr. Maxwell-Hyslop: The hon. Member was referring to his own Front Bench. He thought that they had in mind—but were deterred by difficulties—the problems envisaged in the Amendment. I do not believe that they had them in mind at all. The entire Finance Bill, like that of last year, is riddled with incompetence. It was not clearly thought out before it was introduced. Neither
    1346
    the mechanics of carrying it out nor the purpose were properly defined when the Bill was drafted in the first place. Nor was it competently drafted. As we progress further through the Bill, further through the night, further through the week and further through the month, the hon. Member will find that out with a superior degree of conviction to that which he has at the moment.
    We do not yet know what will be the response of the Treasury Bench to the Amendment or what will be the response of those who have given lip-service to its aims. We observed them supporting a previous Amendment with their voices and then scuttling into the Lobby to support the Government. I have something less than confidence that those who have advanced on the benches opposite good concrete reasons in favour of the Amendment, supported by adequate evidence, will have the courage of their convictions and will vote for it if it comes to a Division.
    Let us still permit the flame of hope to burn within us. Let us hope that the Treasury Bench will reply that the Amendment is reasonable, because it turns a regressive tax into an effective flat-rate tax, because it does not go to the heart of the objectives of the Selective Employment Tax, ill-warranted as those objections are, and because it does not ruin the financial forecast on which the Budget was based. The results are nothing like as heavy as that.
    The best reason of all is the positive reason for accepting the Amendment: it will not turn a foolish tax into a good tax, but it will reduce the sum total of anomalies and injustices introduced by the Clause. Unless the Government can see their way to accept the Amendment and its consequential Amendments or be persuaded to do so by the voting of the Committee, this will be a worse Finance Bill than it need otherwise have been.
    The Chief Secretary to the Treasury (Mr. John Diamond): As was expected, this debate has dealt with the principle of part-time workers and with the mechanical details of the collection of the tax. It was inevitable that the principle should be debated, because it is to meet the fears and anxieties which my hon. Friend the Member for Putney (Mr. Hugh Jenkins) has about part-time

    1347
    workers, or certain categories of them that he was seeking to propose a method by which there would no longer be a disproportionately heavy tax on those who worked a disproportionately short time a week, by having a flat-rate tax. It was, therefore, right and proper—and, indeed, inevitable—that the principle should have been brought in.
    The Chair has been good enough to let the Committee debate several Amendments dealing with the principle of the part-time worker, and I am sure that it is right that the arguments for and against part-time workers in this connection should be fully deployed when we come to the Amendments which have been selected. Suffice it to say, meantime, that the debate we will have will, I am sure, satisfy the Committee that the anxieties expressed about part-time workers are somewhat exaggerated.
    My hon. Friend the Member for Putney moved an Amendment which is attractive. It is not aimed at destroying the tax, it is not aimed at postponing it for an unconscionable time and it is not aimed at withdrawing revenue. It is aimed, in a practical way, at overcoming a difficulty which we all recognise. It therefore has many attractions.
    My hon. Friend was right in saying that this is a difficulty, and we recognise that it is. There is no point in having a disproportionate tax if one does not have to have one, and we would have been only too glad to have provided a method of avoiding a disproportion which was consistent with the need to introduce a tax of this kind at this time with the machinery that is available and which would be capable of being collected in an economic fashion.
    My right hon. Friend is right in saying that we would have introduced something to meet his point had it been possible to do so. But the Committee will have noticed that, whereas the debate on the principle showed a great deal of unanimity about the anxieties concerning the effect of S.E.T. on part-time workers—be they disabled or other part-time workers; we all wish to pay particular attention to them—it showed anything but unanimity on the method by which the tax could be collected.
    1348
    My hon. Friend the Member for Putney put forward his very interesting method, with which I will deal shortly. He was supported by the hon. and learned Member for Northwich (Sir J. Foster) who said he recognised that the proposal of my hon Friend would not work but who also said that he had a proposal based on P.A.Y.E. which would work.
    Sir J. Foster: I did not say that it would not work. I said that I had an improvement on it.
    Mr. Diamond: I do not want to put words into the hon. and Learned Gentleman's mouth. He speaks with great care, and I withdraw any words which I inadvertently attributed to him. He said that he had an improvement on my hon. Friend's method. His improvement was to make the payment of the tax depend on the machinery of P.A.Y.E., but he was overlooking the fact that there are many people—I do not have the exact number—to whom P.A.Y.E. does not apply but where this tax would apply.
    The hon. Member for Norwood (Mr. John Fraser) said he recognised that the proposal of my hon. Friend the Member for Putney was not a practicable one, but that he had a better suggestion, which was to relate it to the graduated pensions scheme, although he omitted for the moment—and I am sure that it was only for the moment—to recollect that there are vast numbers who are contracted out of that scheme, vast numbers in respect of whom the tax should be paid. When we look at it from the point of view of either of the two methods suggested we find immediate and very evident difficulties which my hon. Friend the Member for Putney would hope are not associated with his scheme.
    I come back to my hon. Friend's scheme, which is the only one before us at the moment. I have dealt with the others because it was obviously courteous to do so and because, in the Committee, there is recognition that there are great difficulties about the scheme of my hon. Friend the Member for Putney which hon. Members would like to meet if they can. The Government very much sympathise with this and would like to have a scheme which would not result in a disproportionate tax if this were possible.

    1349
    9.0 p.m.
    The tax has been described as a flat-rate tax by the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), and as a regressive tax by the hon. Member for Tiverton (Mr. Maxwell-Hyslop), but I say that this tax is, in fact, a progressive tax. The tax is a tax on services. If both hon. Members will be good enough to direct their minds to services and the relation which services bear to standards of income, they will recognise immediately—it is not denied in any quarter—that this is a progressive tax. I am not talking about a particular Amendment, but about the fact that the tax as a whole is a progressive tax.
    Mr. Maxwell-Hyslop: Is not the comment by the right hon. Gentleman true only on the assumption that every bit of tax is passed on to the consumer?
    Mr. Diamond: It is not true on that basis alone. I do not want to divert the debate on this issue, but I do both hon. Members the courtesy of responding to their comments. And I wish to make quite clear that the Government do not accept that this is not a progressive tax.
    I come next to the proposal of my hon. Friend the Member for Putney, having made clear that there are difficulties associated with the many alternative proposals. I must also ask the Committee to recognise that there are difficulties associated with his. First, I deal with the question: should there be stamps or can we manage without stamps? If one is reduced to stamps one is faced immediately with difficulties. There have been many similar occasions where an additional tax has been put forward, not by this Government but by previous Governments, where methods of collection have been considered and it has been decided that by far the most simple and reliable method is to have a stamp, or to add it to the existing National Insurance stamp.
    I need only remind the Committee about the Industrial Injuries Scheme payments which are collected in the same way, and, more recently, payments under the redundancy scheme. I can assure my hon. Friend, from vast experience, that this is the only economic, reliable, and fair way of collecting taxes of this nature. Other methods have been fully considered on every occasion. It simply
    1350
    would not be practicable to adopt a different kind of system. It would not be fair to other taxpayers. It would not be administratively possible to adopt a system other than that of relying on stamps. If we rely on stamps we are brought up against a very major difficulty of having all the different categories of stamps which one would require to satisfy the detailed proposals of my hon. Friend. We would need a book as big as a blackboard to provide space for every different kind of stamp and it would be administratively far too difficult to cope with.
    My hon. Friend has assumed that in all cases the hours of work are known, but that is very far from being the case—very far indeed. There are all the salaried employees who work a variety of hours. Their hours are not known. There are vast numbers of factory workers and others who are paid not by reference to hours who work different hours. There is a whole host of employees in services of one kind or another whose hours of work are not known. It would be an enormous burden to put on the employer to find the hours of work and to pay stamps accordingly. The difficulties associated with this are of such an order that it is just not a practicable scheme, as my hon. Friend the Member for Norwood pointed out. The other schemes proposed also have their glaring difficulties.
    We have thought about this very carefully. We do not think that the difficulties associated with part-time workers are anything like as great as some hon. Members on both sides fear, although we recognise that these are difficulties to be taken very seriously into account. The debate which we shall have when you, Sir Eric, are good enough to call that series of Amendments, will give an opportunity for expounding these arguments in full. I am bound to tell my hon. Friend that, attractive as his proposal is, constructive as it is, and constructive as was the method by which he put it forward to the Committee, I cannot recommend the Amendment to the Committee.
    Mr. Hugh Jenkins: Can I read into what my right hon. Friend has just said that, when the matter of part-time work comes up for discussion at a later date,

    1351
    the Government's approach to the problem will be sympathetic and possibly constructive?
    Mr. Diamond: I must not in any way mislead my hon. Friend. The Government will, as ever, be sympathetic and constructive, but I do not want by that to mislead my hon. Friend into thinking that we have any particular proposals for machinery which would meet the difficulties relating to part-time workers.
    The debate will, I think, satisfy my hon. Friend that many of his anxieties about part-time workers are without foundation. I think that the debate will satisfy my hon. Friend that we are most anxious to ensure that in no circumstances are part-timers lost to the total labour force. It is along those lines that the arguments will develop.
    My right hon. Friend the Chancellor is not proposing, in connection with part-timers, to alter the method of payment of the tax at this stage. My right hon. Friend has made it clear throughout that there is nothing in the tax to prevent us from considering, after we have seen it working for an appropriate time, whether it is necessary to introduce further refinements at a later date.
    Mrs. Margaret Thatcher: I do not rise with the intention of curbing the debate in any way, because I recognise that there are a number of my hon. Friends and hon. Members opposite who may still wish to speak. I want to register a protest now at the Chief Secretary's reply to the debate. If the hon. Member for Putney (Mr. Hugh Jenkins) is satisfied with that reply, he will be satisfied with anything.
    The Chief Secretary always has a lot of sympathy, but it never extends to his pocket. What we are asking for is some fiscal change with regard to part-time workers. All the argument has shown the unwisdom of using the National Insurance system as a means of raising general revenue. The whole National Insurance system was designed to give specific insurance cover to individuals, and the amount they receive is related to their own contributions.
    I agree that certain things have been drafted on to the system. However, Industrial Injury benefits, which the
    1352
    Chief Secretary mentioned, are also designed to give specific insurance cover. Redundancy payments are designed to give specific cover in certain events. The National Health Service contribution is a revenue earmarked for a specific purpose. There has been no example yet of using this system designed for individual insurance cover as a means of raising large sums for general revenue purposes. I think a lot of the trouble would not have arisen had this been a very small impost. It is the general level of 25s. for a man and 12s. 6d. for a woman which has led to a great deal of the argument. It was a staggering amount to impose. It is this which has given rise to this debate.
    I say to the hon. Member for Putney that if we could have knocked this tax out completely, we would have done. But all Oppositions recognise that if they cannot do that, they must concentrate their case on mitigating the effect of the tax upon deserving cases, and that is the spirit in which we approach this Amendment. I accept that, once the Chief Secretary had decided to use the flat-rate National Insurance system, he was bound to be in difficulties. But in deciding to use that system, what he was saying was that he preferred simplicity of collection to all reasons of an equitable distribution of the burden and to all reasons of social justice.
    What he should have done was to have said, "This is the amount of tax we want to raise. Now we must consider how best that burden should be distributed and what are the economic side-effects of the decisions we take." What he has done has been to say, "We want so much tax. We must use the National Insurance poll tax system of collection. Therefore, we must ignore equity. Therefore, we must disregard the economic side-effects. Therefore, we must turn our back on social cases."
    I cannot accept any of that at all. My hon. Friends and hon. Members opposite have given very cogent detailed accounts of the effects of this particular poll tax on various part-time workers and on various social cases. They have made out their case excellently. It is quite wrong that a woman who works for nine hours a week should attract the same amount of tax liability on her employer

    1353
    as a woman who works 42 hours a week. It is quite wrong that a woman aged 22 who works for 48 hours a week should attract the same tax liability as an old-age pensioner who works perhaps for two days a week. Clearly the old-age pensioner should attract very much less, and the woman who works for a much shorter time also should attract a lesser tax liability.
    One of the difficulties of the Chief Secretary is because of the eight-hour rule in the National Insurance scheme. When we tried to deal with this, the Chancellor said the other day, "That would mean that a number of people who had insurance cover would not get it if we raised that limit to 20 hours." That shows the unwisdom of using this system of collection, because it was never designed for this purpose.
    9.15 p.m.
    On the method of collection, a number of alternative suggestions have been proposed. The hon. Member for Norwood (Mr. John Fraser) suggested not, I thought, P.A.Y.E. but an extension of the graduated pension contribution. The Chief Secretary said that a large number of persons contracted out. Of course they did, but in September when wage-related earnings contributions come in, everyone will be paying graduated contributions for graduated sickness or unemployment benefit, provided they earn above £9 a week. Everyone will be in it.
    It would be a very good thing if people who earned less than £9 a week did not attract any tax liability. It would be a different equitable way of achieving what the hon. Gentleman wants to achieve. All those above £9 a week will be paying graduated contributions of one sort or another. Therefore, the Chief Secretary does not have to be bound by the flat-rate system. He could have chosen the other way.
    He could have achieved the purpose of the Amendment even under the flat-rate National Insurance system. He has chosen to make the tax follow the employer's contribution. Had he made it follow cases in which both employer's and employee's contributions are paid, a lot of the people we want to help would have been out of the purview of the tax. For example, retirement pensioners who work do not pay the employee's contribution. Those drawing widow's pension
    1354
    do not pay the employee's contribution. Married women who opt out of National Insurance, the vast majority of part-timers, do not pay the employee's contribution. Had the right hon. Gentleman made it dependent upon employer's plus employee's contribution, many of the anomalies which he has now brought in would automatically have been out.
    I do not accept his reasoning or that he has exhausted the possibilities under either the flat-rate National Insurance system or under the graduated system. Perhaps he has not lived with the system as long as I have, or perhaps he has not been tough enough with the Department. There are some very good people with some very good ideas on this subject, and it is an insult to say that they have not some method to offer for overcoming the difficulties.
    The case on merit is very strong. I understand that it was said in the debate on the Selective Employment Tax that one of the reasons why the tax in respect of women was 12s. 6d. per head was that so many women were part-time workers. This was never part of the White Paper or of the Chancellor's original speech. The original reason given for the tax in respect of a woman being 12s. 6d. as against 25s. for a man was that average earnings for a woman working full time were less than half the average earnings of a man working full time. For example, in the Monthly Digest of Statistics for May the average earnings of a man in manufacturing industry were given as £20 3s. 3d. and the average for a woman working full time were given as £8 11s. 11d. a week.
    That was the reason for the difference in the tax, and it has no part-time element in it at all. The average women working part time works 21·9 hours for £5 2s. 11d. a week. If one is to say that the reduction of the tax for women should take into account that a large number work part time, it should be only a quarter of the tax for men, not a half. I cannot accept that, therefore. It would be a great help for women working part time if the tax were only 6s. 3d., but the Chief Secretary would then have gone half way to meet us.
    The case in respect of retirement pensioners who put in a couple of days and for the handicapped is even stronger. There are many who employ such people

    1355
    for social reasons. It is often better for a retirement pensioner to go out to work even though, perhaps, he cannot put as much into the hours, one pays him for doing certain odd jobs. To add 25s. a week to the cost of employing a retirement pensioner for a couple of days in the garden may mean that he has to be stood off altogether and has to go to National Assistance. Most of us who employ such people for what I call social reasons will, naturally, do our level best not to stand them off, but there will be a number who have to be.
    There will also be a number of employers in the retail trade who stand off part-timers and see whether they can find one skilled full-timer because of the imposition of the Selective Employment Tax. The effect of this will be quite the reverse of what the Chief Secretary wants. Instead of employing labour which could not be used elsewhere, they will draw off skilled labour which could be used elsewhere.
    The right hon. Gentleman has given one of the weakest replies on the whole Budget. This is a strong case on merit for mitigating the effects of the tax on part-timers and on the mentally and physically handicapped. We agree with the purpose behind the Amendment. We hope that the hon. Gentleman will press it to a Division, and we shall support him in order to give as much help as we can to these people.
    Mr. Norman Miscampbell: I shall not delay for long the opportunity of the hon. Member for Putney (Mr. Hugh Jenkins), who moved Amendment No. 17, to vote with us. We have had a thoroughly disappointing reply from the Chief Secretary. There is no reason why we should cease to urge upon him better ways. After all, he will have plenty of opportunities, if he does not accept them here and now, to think better of the decision that he has made this evening.
    The right hon. Gentleman says that he thinks that the difficulties of part-timers are greatly exaggerated. I wonder whether it would be possible to exaggerate them in the case of certain industries which depend almost entirely on part-timers. The right hon. Gentleman says, as every Minister does, that there are technical difficulties why these people
    1356
    cannot be excepted, why Amendment No. 17 cannot be accepted, and why he does not even wish to accept the spirit of the Amendment. The answer is that all these difficulties are wished upon a Government who have imposed such a high rate of taxation—25s. or 12s. 6d.—on a selected pattern of the employed population. I can see that, once that decision was taken, exceptions would be difficult.
    Let us consider whether we have been exaggerating in any way. Let us look at the difficulties of certain industries in which part-time workers are a common feature. I will take two examples of different social importance, or, at any rate, ones which we may view differently.
    First, it is perhaps not often realised that those who provide holiday accommodation for, often, the lower-paid workers all round our coasts—I am not thinking just of Blackpool, but my constituency cannot be far from one's mind in this—rely almost exclusively on part-time workers. A typical hotel or boarding house has the proprietor and his family and a squad of part-time workers to help. It is difficult to get people who will work the whole time because of the long hours which have to be worked in the season, so one has to rely on part-time workers.
    Some come in to do the breakfasts and the washing-up, some come in for lunch, and others come in later. The burden upon an industry which has to rely almost exclusively on part-time workers is in many cases even greater than if it had full-time workers able to work all through the day.
    Mr. Eric Lubbock: Does not the hon. Gentleman think that the Government are encouraging tax evasion, that people in this position will be encouraged to say that their employees are doing less than eight hours?
    Mr. Miscampbell: I have not the slightest doubt that that will be the circumstance in many places, though I hesitate to suggest that it is likely to happen in Blackpool. But I suppose one can envisage a situation where it may happen there. Certainly, common sense indicates that this will be the type of thing that will happen. In any establishment where people are just coming in and going out all day, it is all too easy for that type of thing to happen.

    1357
    As the Committee may feel that that is a particular constituency point, I turn from it to something else of which I am well aware because of the constituency that I represent. There must be scores of other hon. Members who have exactly the same problem. Anyone who represents a constituency which contains a high proportion of old-age pensioners will find that a common feature of their constituencies is a number of nursing homes which provide care and help for the old and for those in post-operative conditions who must be looked after.
    These are people for whom the National Health Service and the hospitals have no place—people who are too old and too ill to stay at home, but there is no place for them in the hospitals. They are not being looked after by full-time nurses, who are in too short supply, but by part-timers who come in to help the old, the sick and the geriatric and post-operative cases.
    Only two months ago, during the election campaign, all of us went round such establishments to see the old folk. The problem was put before us and one could not turn away. I am thinking particularly of one place where there are usually about 18 or 19 patients and 12 part-time workers who come in every day to look after them. This is not an expensive establishment. It is as modest in its fees as such a place can be—a scale of 12, 13, or 14 guineas a week. That is the minimum possible for people to be looked after in these conditions.
    Yet the Government have decided that it is impossible to leave such establishments out of an impost which will amount to about £350 to £400 a year. Such a selection has no social merit. If such places are not exempted it will be quite shameful. I have instanced these examples, but I remind the Committee that part-time workers are the basis of many industries and social services.
    Mr. Hugh Jenkins: May I, Sir Eric, have leave of the Committee to speak again for a few moments?
    The Chairman: The hon. Gentleman does not need leave to speak again.
    Mr. Jenkins: I think that it is necessary for me to speak again. Hon. Members who have just come into the Chamber
    1358
    are not aware that what is being debated is an Amendment in my name. Most of the debate has been directed to two main questions: first, whether the position of part-time workers in principle is one which the Government need to ameliorate; and, secondly, whether my proposal is the right and practicable way of dealing with it.
    On the question of principle, most of the Committee seems to agree that it is desirable to do something special for part-time workers. That is a wide range of agreement. I have not been convinced by my right hon. Friend on the question of practicability. He holds out to us the prospect that he will say something later about the position of part-time workers which will make us feel that the position is not as grave as we think. Unfortunately, he has not told us now.
    In effect, he says, "Do not press the Amendment, because, later, I shall tell you something which will make it unnecessary for you to do so." If I had to rely on that alone, I would not be able to agree with my right hon. Friend, but what has convinced me is the arguments put forward by hon. Members opposite. One after another they said that this was a good proposal in principal, but that for one reason or another it would not work, and then they suggested this, that or the other alternative. With one or two exceptions, practically every hon. Member opposite who has spoken has said that the principle of the Amendment is right, but that it would not work. The hon. Member for Blackpool, North (Mr. Miscampbell), however, agreed that it was right and was practicable, but there is still a great deal of difference between us, because I am in favour of the tax in principle whereas he is not.
    9.30 p.m.
    In these circumstances, the question arises what action the Committee ought to take and, in particular, what action I should take. For me to pursue an Amendment which, I am convinced by hon. Members opposite, would be impracticable of working would be entirely wrong. Therefore, because hon. Members opposite are apparently only too keen to go through the Lobby in support of my Amendment, which they believe to be hopelessly wrong in order to assist me to defeat my own Government, which is a

    1359
    proposition I could not be expected to accept, I beg to ask leave to withdraw the Amendment. [HON. MEMBERS: "No."] In doing so, I must tell my right hon. Friend that we shall want to hear some stronger arguments from him about the
    position of part-time workers before the debates on this Clause are over.
    Question put, That those words be there inserted:—
    The Committee divided: Ayes 134, Noes 175.

    Division No. 60.]

    AYES

    [9.32 p.m.

    Allason, James (Hemel Hempstead)

    Griffiths, Eldon (Bury St. Edmunds)

    More, Jasper

    Astor, John

    Grimond, Rt. Hn. J.

    Munro-Lucas-Tooth, Sir Hugh

    Baker, W. H. K.

    Gurden, Harold

    Murton, Oscar

    Balniel, Lord

    Hamilton, Marquess of (Fermanagh)

    Nabarro, Sir Gerald

    Batsford, Brian

    Harris, Frederic (Croydon, N.W.)

    Neave, Airey

    Bell, Ronald

    Harrison, Brian (Maldon)

    Nott, John

    Bessell, Peter

    Harvey, Sir Arthur Vere

    Onslow, Cranley

    Biffen, John

    Hastings, Stephen

    Orr-Ewing, Sir Ian

    Biggs-Davison, John

    Heald, Rt. Hn. Sir Lionel

    Osborne, Sir Cyril (Louth)

    Birch, Rt. Hn. Nigel

    Higgins, Terence L.

    Page, Graham (Crosby)

    Black, Sir Cyril

    Hiley, Joseph

    Page, John (Harrow, W.)

    Blaker, Peter

    Hirst, Geoffrey

    Pardoe, John

    Boyd-Carpenter, Rt. Hn. John

    Hogg, Rt. Hn. Quintin

    Peel, John

    Boyle, Rt. Hn. Sir Edward

    Holland, Philip

    Percival, Ian

    Brinton, Sir Tatton

    Hooson, Emlyn

    Peyton, John

    Brown, Sir Edward (Bath)

    Hordern, Peter

    Pink, R. Bonner

    Bruce-Gardyne, J.

    Howell, David (Guildford)

    Pounder, Rafton

    Burden, F. A.

    Hunt, John

    Powell, Rt. Hn. J. Enoch

    Campbell, Gordon

    Iremonger, T. L.

    Price, David (Eastleigh)

    Carlisle, Mark

    Jenkin, Patrick (Woodford)

    Pym, Francis

    Channon, H. P. G.

    Jennings, J. C. (Burton)

    Ramsden, Rt. Hn. James

    Chichester-Clark, R.

    Kimball, Marcus

    Rees-Davies, W. R.

    Clark, Henry

    King, Evelyn (Dorset, S.)

    Ridley, Hn. Nicholas

    Clegg, Walter

    Kirk, Peter

    Ridsdate, Julian

    Cooke, Robert

    Knight, Mrs. Jill

    Roots, William

    Costain, A. P.

    Lambton, Viscount

    Sharples, Richard

    Craddock, Sir Beresford (Spelthorne)

    Lancaster, Col. C. G.

    Smith, John

    Cunningham, Sir Knox

    Langford-Holt, Sir John

    Steel, David (Roxburgh)

    Dance, James

    Longden, Gilbert

    Taylor, Sir Charles (Eastbourne)

    Davidson, James (Aberdeenshire, W.)

    Loveys, W. H.

    Temple, John M.

    Deedes, Rt. Hn. W. F. (Ashford)

    Lubbock, Eric

    Thatcher, Mrs. Margaret

    Dodds-Parker, Douglas

    McAdden, Sir Stephen

    Thorpe, Jeremy

    Doughty, Charles

    Mac Arthur, Ian

    Turton, Rt. Hn. R. H.

    Elliot, Capt. Waller (Carshalton)

    Mackenzie, Alasdair (Ross&Crom'ty)

    Wainwright, Richard (Colne Valley)

    Elliott, R.W.(N'c'tle-upon-Tyne,N.)

    Maclean, Sir Fitzroy

    Walker, Peter (Worcester)

    Eyre, Reginald

    Macleod, Rt. Hn. Iain

    Walker-Smith, Rt. Hn. Sir Derek

    Fisher, Nigel

    McMaster, Stanley

    Ward, Dame Irene

    Fortescue, Tim

    Maddan, Martin

    Weatherill, Bernard

    Foster, Sir John

    Mathew, Robert

    Webster, David

    Gibson-Watt, David

    Maude, Angus

    Whitelaw, William

    Glover, Sir Douglas

    Mawby, Ray

    Wills, Sir Gerald (Bridgwater)

    Goodhart, Philip

    Maxwell-Hyslop, R. J.

    Winstanley, Dr. M. P.

    Goodhew, victor

    Mills, Peter (Torrington)

    Gower, Raymond

    Mills, Stratton (Belfast, N.)

    TELLERS FOR THE AYES

    Grant-Ferris, R.

    Miscampbell, Norman

    Mr. Anthony Grant and

    Grieve, Percy

    Mitchell, David (Basingstoke)

    Mr. George Younger.

    NOES

    Allen, Scholefield

    Callaghan, Rt. Hn. James

    Doig, Peter

    Archer, Peter

    Carmichael, Neil

    Dunnett, Jack

    Armstrong, Ernest

    Castle, Rt. Hn. Barbara

    Dunwoody, Mrs. Gwyneth (Exeter)

    Atkinson, Norman (Tottenham)

    Coe, Denis

    Dunwoody, Dr. John (F'th & C'We)

    Barnes, Michael

    Coleman, Donald

    Eadie, Alex

    Barnett, Joel

    Conlan, Bernard

    Faulds, Andrew

    Benn, Rt. Hn. Anthony Wedgwood

    Corbet, Mrs. Freda

    Fernyhough, E.

    Binns, John

    Craddock, George (Bradford, S.)

    Finch, Harold

    Bishop, E. S.

    Crawshaw, Richard

    Foley, Maurice

    Blackburn, F.

    Cronin, John

    Ford, Ben

    Boardman, H.

    Dalyell, Tam

    Fraser, John (Norwood)

    Booth, Albert

    Davidson, Arthur (Accrington)

    Garrett, W. E.

    Bowden, Rt. Hn. Herbert

    Davies, Dr. Ernest (Stratford)

    Gordon Walker, Rt. Hn. P. C.

    Braddock, Mrs. E. M.

    Davies, G. Elfed (Rhondda, E.)

    Gourlay, Harry

    Bray, Dr. Jeremy

    Davies, Ifor (Gower)

    Gregory, Arnold

    Brooks, Edwin

    Davies, Robert (Cambridge)

    Griffiths, David (Rother Valley)

    Broughton, Dr. A. D. D.

    Dell, Edmund

    Griffiths, Will (Exchange)

    Brown, Rt. Hn. George (Belper)

    Dempsey, James

    Hale, Leslie (Oldham, W.)

    Brown, Hugh D. (G'gow, Provan)

    Dewar, Donald

    Hamilton, James (Bothwell)

    Brown, R. W. (Shoreditch & F'bury)

    Diamond, Rt. Hn. John

    Hamilton, William (Fife, W.)

    Buchanan, Richard (G'gow, 8p'bum)

    Hannan, William

    Dickens, James

    Harper, Joseph

    Mackintosh, John P.

    Rose, Paul

    Harrison, Walter (Wakefield)

    McNamara, J. Kevin

    Ryan, John

    Hattersley, Roy

    Manuel, Archie

    Shaw, Arnold (Ilford, S.)

    Hazell, Bert

    Mapp, Charles

    Sheldon, Robert

    Heffer, Eric S.

    Mason, Roy

    Shore, Peter (Stepney)

    Henig, Stanley

    Mendelson, J. J.

    Short,Rt.Hn.Edward(N'c'tle-u-Tyne)

    Herbison, Rt. Hn. Margaret

    Mikardo, Ian

    Short, Mrs. Rente (W'hampton,N.E.)

    Hooley, Frank

    Miller, Dr. M. S.

    Silkin, John (Deptford)

    Houghton, Rt. Hn. Douglas

    Molloy, William

    Silkin, S. C. (Dulwich)

    Howarth, Harry (Wellingborough)

    Moonman, Eric

    Small, William

    Hoy, James

    Morgan, Elystan (Cardiganshire)

    Spriggs, Leslie

    Hughes, Rt. Hn. Cledwyn (Anglesey)

    Morris, Charles R. (Openshaw)

    Summerskill, Hn. Dr. Shirley

    Hunter, Adam

    Moyle, Roland

    Swain, Thomas

    Hynd, John

    Mulley, Rt. Hn. Frederick

    Symonds, J. B.

    Jackson, Colin (B'h'se & Spenb'gh)

    Noel-Baker,Rt.Hn.Philip(Derby,S.)

    Taverne, Dick

    Jay, Rt. Hn. Douglas

    Oakes, Gordon

    Thomas, Iorwerth (Rhondda, W.)

    Jones, Dan (Burnley)

    Ogden, Eric

    Tinn, James

    Jones, Rt.Hn.SirElwyn(W.Ham,S.)

    O'Malley, Brian

    Urwin, T. W.

    Jones, J. Idwal (Wrexham)

    Orme, Stanley

    Walden, Brian (All Saints)

    Judd, Frank

    Owen, Dr. David (Plymouth, S'tn)

    Walker, Harold (Doncaster)

    Kelley, Richard

    Paget, R. T.

    Watkins, David (Consett)

    Kerr, Dr. David (W'worth, Central)

    Panned, Rt. Hn. Charles

    Weltzman, David

    Lever, Harold (Cheetham)

    Parker, John (Dagenham)

    Wells, William (Walsall, N.)

    Lever, L. M. (Ardwick)

    Pearson, Arthur (Pontypridd)

    Whitaker, Ben

    Lewis, Arthur (W. Ham, N.)

    Pentland, Norman

    White, Mrs. Eirene

    Lewis, Ron (Carlisle)

    Perry, George H. (Nottingham, S.)

    Whitlock, William

    Lomas, Kenneth

    Prentice, Rt. Hn. R. E.

    Williams, Alan Lee (Hornchurch)

    Loughlin, Charles

    Price, Christopher (Perry Barr)

    Williams, Clifford (Abertillery)

    Luard, Evan

    Price, Thomas (Westhoughton)

    Wilson, Rt. Hn. Harold (Huyton)

    Lyon, Alexander W. (York)

    Randall, Harry

    Wilson, William (Coventry, S.)

    Lyons, Edward (Bradford, E.)

    Redhead, Edward

    Winnick, David

    McBride, Neill

    Reynolds, G. W.

    Winterbottom, R. E.

    McCann, John

    Roberts, Albert (Normanton)

    Woof, Robert

    MacDermot, Niall

    Roberts, Gwilym (Bedfordshire, S.)

    Zilllacus, K.

    Macdonald, A. H.

    Robertson, John (Paisley)

    McGuire, Michael

    Robinson, Rt.Hn. Kenneth(St.P'c'as)

    TELLERS FOR THE NOES:

    McKay, Mrs. Margaret

    Robinson, W. O. J. (Walth'stow E.)

    Mr. Charles Grey

    Mackenzie, Cregor (Rutherglen)

    Roebuck, Roy

    Mr. George Lawson.

    Mackie, John

    Rogers, George

    Mr. Ronald Bell: I beg to move Amendment No. 268, in page 48, line 19, at the end to insert:
    (a) for the first or only person in respect of whom the employer is so liable, one penny; and.
    The Chairman: We can take, at the same time, Amendment No. 269, in line 20, at beginning insert:
    "for every other such person".
    Amendment No. 270, in line 22, at beginning insert:
    "for every other such person".
    Amendment No. 271, in line 24 at beginning insert:
    "for every other such person".
    and Amendment No. 272, in line 26, at beginning insert:
    "for every other such person".
    Mr. Bell: The effect of the Amendment is to leave out from the incidence of the tax the first person employed by each employer. The other Amendments are consequential on the first.
    The Selective Employment Tax lays a considerable burden on people liable to it. For a man it is £65 a year, and for
    1362
    a women £32 10s. a year. These are considerable sums for those in a small way of business or life, and the purpose of the Amendments is to mitigate the burden suffered by such people.
    There are two ways in which the burden of the tax can, in some cases, be mitigated. One is by passing the tax to the community at large by making an appropriate increase in the price of the goods or services sold. The other is by charging the tax as a trading expense. It may be contended that there are two other ways, which are by increasing productivity so that the tax is offset by a higher gross profit, or by making fewer employees do the same work, which is another way of expressing the same thing. These last two are not really ways of mitigating the burden of the tax, but in relation to this Amendment I shall be broad minded and will consider all four.
    The Amendment would give complete relief to someone who employs only one person. It would give half relief to someone who employs only two people. Then there is a rapidly diminishing degree of relief becoming negligible quite soon as the scale of employment rises. It is, therefore, designed to soften the blow for the smallest employer.

    1363
    My reason for proposing the Amendment is that the smallest employers are the hardest hit by this tax, in the following ways. First, the smallest employer of all is often not in trade or business at all and, therefore, cannot pass on the tax to an ultimate consumer and must carry it all himself or herself. In the same way, the tax does not rank as an expense against Income Tax or Corporation Tax where there is no business. In this category come domestic helps for the old, which the Financial Secretary to the Treasury will no doubt tell me—if he can make his voice heard through the conversation which comes from the Front Bench below the Gangway; although I do not hear it so much now—is covered by Clause 6 of the Selective Employment Payments Bill, which we shall be considering more particularly next week.
    9.45 p.m.
    Clause 6 of the Selective Employment Payments Bill covers part-time employment, about which we have heard a good deal this evening, people who have large families—and again, I expect, I shall be told that Clause 6 of the Selective Employment Payments Bill looks after them; wives who have remained in employment or who have gone back to it—
    Sir D. Glover: Perhaps my hon. and learned Friend can help me. Is it not quite wrong for the House of Commons at this stage to anticipate the debate on the Selective Employment Payments Bill, which is due next week? We are dealing today with the Finance Bill.
    Mr. Bell: We have, of course, debated the Payments Bill on Second Reading, when Clause 6 was in it. I agree that we cannot foretell the course of the examination of the Bill which I forecast for next week, but we know that Clause 6 is in it. I realise that the Financial Secretary to the Treasury is in a position to tell me that some of the categories that I have mentioned are covered by Clause 6 as it starts its life; but I shall have some comment to make about that presently.
    Into this category come widowers, who are not covered by Clause 6 of the Payments Bill; nurses for sick children, who, I suppose, in some degree
    1364
    are covered; and all the various kinds of direct help that one comes across. We had an interesting debate just now on the position of one kind of direct personal employee, because that is what pensioners most commonly are, and the Chief Secretary was in great difficulty because he wanted desperately to do something but could not do it, or so he told us. I am providing a mechanism which may tome to his aid in this terrible dilemma in which we from this side have such keen sympathy with the right hon. Gentleman.
    We all know that some hard cases are not covered by Clause 6 of the Payments Bill. In Clause 6 of that Bill, to be old one has to be 70. Some people are old before they reach that age, and yet they might not fall into the second category in Clause 6 of those who are incapacitated by reason of illness or ill health. The Government have conceded the principle by Clause 6 of the Payments Bill that they ought not to have levied this tax on household employees and now they have set up a series of exemptions, which are somewhat closely defined and leave some of the most obvious cases unprovided for, in particular the very one which we have been debating for an hour and a half, the part-time employee.
    When we were discussing the Redundancy Payments Bill in Committee I drew attention repeatedly to that category of small employers called the domestic employers whom it was convenient to summarise as the "vicar's wife". That sort of person is going to be struck at by the provisions of this Clause and of Clause 6 of the Payments Bill. As one hon. Member—the hon. Member for Norwood (Mr. John Fraser), I think it was—said on the last Amendment, it is quite wrong of the Government to be so interested in gathering taxes that they forget the graces of life—a rather surprising sentiment from that side of the Committee, but it was uttered, and I ask the Financial Secretary to remember it.
    If he will work this out and consider the person—and there will be many—who in respect of domestic employment falls through the various subsections of Clause 6 of the Payments Bill, let us take the vicar's wife. She needs domestic help. She cannot very much afford it. She is now to be taxed at 12s. 6d. on it. She

    1365
    may decide that she cannot on that basis carry on with the single domestic help she has. After all, this may be someone who works for three or two days a week, but she has to pay 12s. 6d., an unnecessarily high overhead.
    Therefore, she may decide that she will have to dispense with her employee. At once comes along the Redundancy Payments Act and she has to make a redundancy payment, because although that person may go—I greatly doubt it, but she may go—at once to make Morris motor cars—highly unlikely, but it could happen—and may go the following Monday, it makes no difference: redundancy payment is still to be payable. This sort of unthinking accumulation of taxes on small people can create great hardship.
    My hon. Friends were referring to the same class of employment in connection with the problems of the tourist industry. There again is something which is very much covered by this Amendment. While there are big hotels—we all know the Metropole at Brighton, and so on—there are also many smaller establishments in the tourist industry, most of them small seaside hotels and boarding-houses and so on, which, as my hon. Friends were saying just now, depend to a large extent on part-time employees, and to which it would be a not inconsiderable relief—though it would not solve their problems, it would be a mitigation of their problems—if these employees were exempt from the application of this tax.
    I should like to turn to the small trading and other services employers who are particularly covered by the Amendment which I am moving. Of course, they have the possibility of raising the prices which they charge, and so of passing on the tax. to the consumer, though it is a limited possibility; but though they can charge the amount of tax they, too, will find the tax especially onerous. They, too, are usually people of small resources. Sometimes they render their services to the community with a profit margin which would not be considered an income at all by someone in manufacturing employment. They do it because they like to be their own masters and they value the independence of running a shop or whatever it is. For them, this tax may be quite crippling. The smallest employers have also this characteristic that they
    1366
    enjoy no elbow room for manœuvre, to make the best out of the distinctions which are made in the Bill: they cannot separate the manufacturing and the selling into two curtilages so that at least half their employees earn the premium which can be recovered by skilful arrangement under the Bill.
    The village baker who does the baking himself, possibly with one paid assistant, and who has two paid assistants in the shop will pay the tax on all his employees and thereby will help to pay for the premium which will be collected by the factory bakery which is his rival, with its standardised, lightly singed, crustless cotton wool which the Treasury proposes now to make the beneficiary of an express grant at the expense of the village baker.
    I mentioned that there were two other possible methods which would be urged against me as ways in which the incidence of the tax might be mitigated—increased turnover or higher productivity and the economy of labour by better deployment. Those are the prizes which the Chancellor of the Exchequer has intermittently and with fluctuating enthusiasm dangled before our noses as the prizes of his policy. The Chief Secretary has been rather more consistent about that, possibly because of his better understanding of Hungarian.
    This is certainly set out in the White Paper and was in the Chancellor's Budget speech as one of the objectives. As I indicated just now, neither is a valid escape, since both are just as desirable and advantageous, whether the tax is applied or not. If one gets increased productivity or deploys one's labour better, one has not offset the tax; one has suffered exactly the same, one has gained the same advantage and will lose just as much by paying the tax.
    However, the Chancellor's point, excuse, hope or whatever it was, was that the tax might stimulate economy and efficiency in the use of labour. Let us pretend that it might. Let us assume that taxing newspapers which do not print their own papers in order that they may contribute to a premium per head for the London printing houses may do something to reduce the 30 per cent. over-staffing of the London printing houses which was referred to in the Report of the Royal Commission.

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    It seems a little unlikely, but, in moving this simple Amendment, I feel that I ought not to particularise my scepticism too far. Let us accept the assumption upon which the Chancellor bases the operation of his tax in general. Those savings in labour, which might be the objection to what I am proposing, must surely be achieved where there is large-scale employment of labour. Making 19 do the job that 20 did before is sometimes possible, but making one person do the job that two did before or dispensing with the services of one's sole employee is quite a different proposition. In my experience, at any rate, those who employ only one or two people calculate the cost and the need very closely. They do not hoard labour or waste it. Commonly, they have the greatest difficulty in getting it, because they cannot compete with manufacturing industry and often the rate of pay which in the end they are forced to offer to get anyone at all is a severe burden upon them.
    I would ask the Financial Secretary what social and industrial policy the Chancellor thinks that he is furthering at this bottom end of the employment scale. I think that he is in danger of doing enduring damage and of causing real hardship.
    10.0 p.m.
    In the case of domestic and other direct personal employment, to which I shall refer later, there is no scope at all for the economy of labour. It is the physical presence and the assistance of one person which is the whole object of the employment.
    I said earlier that I would deal with Clause 6 of the Selective Employment Payments Bill. It leaves out certain categories, but the point that I want to make is that even those whom it covers have to reclaim the benefit by going through this machinery of the Supplementary Benefits Commission. It is a very cumbersome process. It does not do the job. It is very tiresome for the applicant, and of course it increases the administrative burden of the tax. There is for these people no scope whatever for economy in the use of labour, nor for deployment or higher productivity.
    The Financial Secretary may perhaps declare, as the Chief Secretary did on
    1368
    the previous Amendment, the keenest sympathy with some or all the classes of people whom I have mentioned in moving the Amendment. He may say that some of them can be looked at again during the Committee stage of the Selective Employment Payments Bill, and that some of the personal cases can be brought within the scope of National Assistance.
    I would regard both of those as thoroughly unsatisfactory answers. I would not think it right that a Selective Employment Tax should be imposed on people to bring them within the scope of National Assistance, and I would not repose much confidence in any remedy for those troubles being sought by amendment of the Selective Employment Payments Bill, because when we come to that next week, if we do not now get what we want, Clause 42 will be just water under the bridge. It will not be much good saying that we ought to do this by not collecting the tax. We have to pursue our remedies here and now, by amendment of this Clause, rather than hope that there will be pie in the sky next week, more especially when we have a shrewd suspicion that there will not be any pie in the sky.
    When we come to consider the mitigation of this hardship by repayment, I have no doubt that we shall hear a good deal about the difficulties of providing for hard cases in that way, beyond what is done in Clause 6, about the problems of definition and evasion, and about the complexity and expenses in administration. I shall add one more to the future objections for the benefit of the Financial Secretary, that the reduction of hardship by particular exemptions can easily increase hardship by anomaly.
    I am offering a single, simple, remedy to the Financial Secretary which, while it leaves the main folly rampant, takes the sting out of the criticisms throughout one sector of the community, and that perhaps the most hard-pressed sector of all, and a sector which can contribute nothing to the Chancellor's labour objectives.
    Lastly—I think that this one is probably beneath the Financial Secretary, but I had better anticipate it in case he does—the right hon. Gentleman may make the point about another denomination of

    1369
    the insurance stamp. If the Government were to accept the Amendment, no doubt they would delete the 1d. at some future stage, and then the payment made in respect of the first employee of each employer would be the same as that for an employed person. There would be no different stamp. In any case, if the Government are in difficulty about another denomination of stamp they can always turn to the Postmaster-General, who will probably produce 20 more if they wish—and a postage stamp in commemoration of the event, too.
    There is no practical difficulty in distinguishing between the first and subsequent employees. If a person who is nominated as a first employee in respect of one employer changes his job for another employment in which he is not first employee but a subsequent employee, then from the relevant week his employer will put the appropriate stamp on for him. Since this extra payment on the stamp in respect of the Selective Employment Tax affects neither insurance benefit nor status, no complication arises from the movement of a person from one occupation to another.
    There is remarkably little risk of evasion by sub-division of enterprises because the prize at stake for a large concern is negligible. It would be a most welcome alleviation of a problem which for many small people is as harsh as it is unexpected, and the relief would easily and naturally be confined to those for whom it was intended.
    I have strong if superficial confidence that the Financial Secretary will not allow his better nature, which has been somewhat eclipsed during the Bill—he was quite kind on the last occasion I moved an Amendment—to be crabbed again by the advice which appears to have prevailed with the Chief Secretary so often during the course of the Bill. I hope that he will start a new era in the story of this Bill. It is not too late, for we have all the new Clauses and all the night ahead of us. I hope that he will start by accepting the Amendment. The Chancellor is by his side and he can seek the Chancellor's authority. I see that the Chancellor wishes him to do so. This Amendment will solve many of the minor difficulties. The folly of the principle is beyond cure here, and we will deal with it later, but the Financial Secre-
    1370
    tary can deal with these immediate problems now and earn the gratitude of the Committee and the country.
    Mr. W. S. Hilton: There is one word used by the hon. and learned Member for Buckinghamshire, South (Mr. Ronald Bell) with which I agree—the word "evasion". My fear about this proposal and the reason I appose it is that the scope for evasion in the proposal for S.E.T. is already far too wide. The opportunity for evasion could lead to a disastrous effect throughout industry, and I hope to be able to say something about that in my speech.
    There is already an exclusion for self-employed people. I had an Amendment down on that subject which was ruled out of order, but I hope to be able to deal with some of the points in relation to this Amendment which I believe is designed not only to relieve the self-employed person of the tax, but also to give him another addition.
    When it is said that large-scale enterprises will not find it advantageous to indulge in evasion, it should be made clear that the construction industry, the largest single employer of male labour in the country, will find it extremely advantageous to indulge in the kind of evasion the Amendment would allow. In that industry today there are about 45,000 gangs of labour-only sub-contractors, each containing perhaps four, five, or six men. If one excluded the originator of the labour only sub-contractor gang, and in addition one of his own men from the tax, one would encourage this example of what some people might loosely call enterprise.
    Mr. Ronald Bell: Does the hon. Gentleman realise that to do that it would be necessary to constitute separate employers, that a company, to get tax relief on the burden of one male employee, which is £32 10s. a year, it would cost more than that to float a separate company? Is he aware that a company doing that would lose on the deal?
    Mr. Hilton: That reveals the hon. and learned Gentleman's ignorance of what is taking place in the construction industry today. Will he accept from me that there are already a quarter of a million people in the construction industry doing this, that some of his hon. Friends,

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    including the hon. Member for Folkestone and Hythe (Mr. Costain), is very apprehensive about this proposal, that there is no question of floating a company where labour-only sub-contractors are concerned and that, therefore, there is no cost?
    Sir D. Glover Sir D. Glover rose—
    Mr. Hilton: I am not raising the question of evasion simply to score a point. I am concerned that the industry should become highly industrialised. However, it cannot become so if it becomes more and more subject to fragmentation, which is what I believe the Amendment would achieve. My hon. Friend the Member for Sheffield, Brightside (Mr. Winterbottom) made a speech the other day in which——
    Sir D. Glover Sir D. Glover rose—
    Mr. Hilton: If you keep interrupting people outside will think that you have been making the speech and I have been interrupting.
    The Temporary Chairman (Sir Harry Legge-Bourke): Order. I assure the hon. Member that I have not been making a speech.
    Mr. Hilton: My hon. Friend the Member for Brightside pointed out in that speech the dangers of the sort of suggestion we are considering. He expressed fear about what would happen in the retail distributive sphere and in services generally. He said that one would find this sort of thing happening in barbers' shops and that 80 per cent. of them would be exempt already because they would come in the self-employed category. He was under the impression that some barbers' shops, with two or three chairs, would be paying the tax. However, I have discovered that a new system, rent-a-chair, is now coming into being. By this system barbers rent individual chairs to people, who become self-employed thereby, and thus avoid the tax.
    As a Labour-Co-operative Movement Member—[Interruption.] I do not know what hon. Gentlemen opposite are complaining about. Long after the proposal of my right hon. Friend the Chancellor in regard to S.E.T. has been forgotten, the Bill will be remembered as resulting in
    1372
    Conservative Members becoming the most fiery supporters of the Co-operative movement.
    The Amendment, from the point of view of evasion, has not been thoroughly thought out by the hon. and learned Member for Buckinghamshire, South (Mr. Ronald Bell) and his hon. Friends. If, for instance, we find this leading to greater evasion in the retail industrial sphere, it is not only a question of a loss to my right hon. Friend from the revenue point of view, but, as a Labour-Co-operative Member, I must look at the effect it will have on my movement, which cannot resort to this type of evasion. If one finds the Co-operative movement is unable to evade the tax through a proposal of this kind, but that its competitors are able to evade it, then a certain section of the retail trade—a section which is a social service—is being put at a very great disadvantage because some other people have been able to avoid the consequences of a tax which it must pay in full.
    10.15 p.m.
    Mr. Burden: Would the hon. Member not agree that if his arguments apply they would apply to every retail store, everyone engaged in the retail business? Why apply the arguments only to the co-operative societies? Presumably the hon. Member does so because they have the support of some hon. Members opposite.
    Mr. Hilton: That is not so. The retail co-operative societies are governed by a democracy of people who will not tolerate the kind of practices which private enterprise is likely to get up to.
    Another point about evasion to which I direct the attention of my right hon. Friends is that it is not simply a question of evasion of this tax. If more and more fragmentation takes place in the construction industry, or other major industries, it will not be merely a question of losing extra revenue but evasion of the industrial training levy will take place. That is very important to the future training of people in industry and to the industrial training legislation as a whole.
    The same applies in relation to redundancy payments. I point out to hon. Members opposite, who do not believe that this proposal would lead to evasion on a large scale, that when the Redundancy Payments Act came into operation there was evasion in some industries

    1373
    in order to avoid the provisions of the Act, which did not bite for two years. This tax will bite immediately. That is why I fear there will be greater evasion.
    Sir D. Glover: I am grateful to the hon. Member for giving way. If I am fortunate enough to catch the eye of the Chair, I will be able to show why I agree with a great deal of what the hon. Member has said about evasion. I want the Committee to accept the Amendment, because people will be forced to evasion unless the proposed law is altered before we make it.
    Mr. Ronald Bell: May I be allowed to point out that, although the hon. Member suggested that the Redundancy Payments Act was not taking effect for two years, it took effect at once. He is confusing that with the qualifying period of two years.
    Mr. Hilton: I am not confusing anything. I am saying that in the construction industry certain builders knew that they would not be liable for payment unless men served in the industry for two years and they used evasion to get rid of their obligation. I already have very grave misgivings about the exclusion of one class of person from this tax because of the effect that will have on industry generally. I have even greater reservations on an Amendment which would allow evasion to take place on a larger scale and which might accelerate the evasion which is taking place already.
    I do not believe that legislation which encourages evasion is good. That is why I am not particularly in agreement with this Amendment and why I hope that my right hon. Friends will take into consideration not only the points I have made, but the points I was unable to make on my own Amendment.
    Mr. R. H. Turton: The fallacy of the argument of the hon. Member for Bethnal Green (Mr. Hilton)—if he is right in saying that there will be a great deal of evasion of the Selective Employment Tax, as I am sure there will be—is that it is not worthwhile people using this method of evasion. All they have to do is to break up their establishment and make all their employees self-employed.
    I like this Amendment, because I think one of the most grievous hardships which
    1374
    will be caused by the tax will be to small income groups. The household with elderly people, the household with a disabled person in it, those who are getting old and have just enough money to take one employee, will be hit extremely hard. The idea that we should allow them one employee as a nominal addition to their establishment has very much to be said for it.
    Is it administratively possible? I would say that it is, because at the moment the Ministry of Pensions and National Insurance periodically circulates all employees asking for the number of cards they hold in their establishments. Those who are in the small income group and who have only one employee are returning regularly one card. Administratively, the Ministry of Pensions and. National Insurance could check this. I agree with my hon. and learned Friend the Member for Buckinghamshire, South (Mr. Ronald Bell) that it would mean one extra stamp, but this would not be a very great burden on the Ministry.
    This would deal with the hardship which arises to those who are covered by Clause 6 of the Selective Employment Payments Bill. These are the cases which are causing worry to hon. Members on both sides—the over-70 households, the disabled households—who will have to make a free loan to the Chancellor out of their exiguous resources, although they will later get their money back. If my hon. and learned Friend's suggestion were adopted, these people would pay a nominal sum per week, which would not be a burden to them. The effect of the Bill as drafted will be to throw many of these households on the National Assistance Board. It would be regrettable if any Measure passed in the House of Commons had that effect on disabled and old people.
    If the Amendment were accepted, it would cut down the cost of administering Clause 6 of the Selective Employment Payments Bill. On Thursday the Chancellor told me that 950 more civil servants would be employed in four Departments. He could not judge how many more civil servants would be employed in the other Departments to be designated under the Selective Payments Employment Bill but he did not think it would be very many.
    This will be a difficult tax to administer. If my hon. and learned Friend's

    1375
    suggestion were adopted in respect of cases covered by Clause 6 of the Selective Employment Payments Bill, where there is only one employee in the household, the administrative task of the Ministry of Pensions and National Insurance and of the Supplementary Pensions Board would be cut down.
    If the Government were to say that they accept the principle behind the Amendment and that they will make a concession in respect of the small income group household with one employee, I hope that my hon. and learned Friend will accept the substitution of "first and only" for "first or only". The purpose of the Amendment is to deal with the case where there is genuinely only one
    1376
    employee. I do not see any merit in applying this to a large establishment with thousands of employees; there would be no value in having a preferential rate for the first employee. A special rate should be available for the first and only employee.
    I beg the Government to realise that this aspect of the tax is causing real worry. We may all hold violent views about the general principle of the tax, but all hon. Members will be very worried about the effect that the Bill as at present drafted will have on people on small incomes, the old people, and especially disabled households, who are having great difficulty at present in managing to live in this affluent society in Britain.
    Mr. R. E. Winterbottom: I do not think that the right hon. Member for Thirsk and Malton (Mr. Turton) is as naive and simple as he sounds. He knows far more about this than to think that his speech touched the reality of the situation.
    Mr. St. John-Stevas: That is exactly what it did.
    Mr. Winterbottom: After hearing what I have to say, hon. Members can judge that question for themselves. Hon. Members know my point of view about this tax. I believe it is directed to the wrong people in distribution. I believe that the people who ought to be touched in distribution are amongst those who are called self-employed. They ought to be brought within the framework of a proper payroll tax, as much as those people who are in the larger distributive establishments.
    When I consider this Amendment I think of the mover who is a lawyer. If any body of persons stands to be shot at, it is the lawyers of this country, with great respect to them. If any section of the country has taken people out of industry in order to seek a living that has no relationship to an incomes and prices policy, it is the lawyers—make no mistake about it. Here we have a prominent lawyer. If we want to compare the figures, in terms of relativity, of those people who have gone into the service industries, we find that a greater proportion have gone into the professional classes, and into the legal class in particular, than any other section of the service industries.
    It is very nice to come here, apparently so innocent, and try to get away with a story like this, but bear in mind that the hon. and learned Member is defending his own profession. How many lawyers are there with just one solicitor's clerk and a girl who gets a wage of goodness knows how much, and goodness knows why sometimes? Indeed, there is no more obvious case for seeking the avoidance of the Selective Employment Tax than that of the legal profession. I do not like this tax at all. Hon. Members know that.
    Mr. Ronald Bell: Does not the hon. Gentleman think that the classic example
    1378
    would be for any Member of Parliament to move the Amendment since most Members of Parliament have one secretary?
    Mr. Winterbottom: I am not so sure. I believe that Members of Parliament themselves should be brought within the framework of this tax as self-employed people. If one is to argue, as I argue, that self-employed people should be brought within the framework of this tax, I see no reason why I should be excluded. From a logical point of view I am self-employed. If we call this a profession—I do not know whether it is or not—then, like the other professions, Members of Parliament should be brought within the framework of a payroll tax.
    The Temporary Chairman (Sir H. Legge-Bourke): I am very sorry to interrupt the hon. Member for Sheffield, Brightside (Mr. Winterbottom), but I would ask him to bear in mind that this Amendment deals particularly with the employer and the one or only employee that he may have. I hope the hon. Gentleman will make his remarks relevant to that matter.
    Mr. Winterbottom: Yes, Sir Harry. All that I have said is the background. Now I will come on to the particular.
    In the sphere of distribution there are between 500,000 and 600,000 distributive units. Over 500,000 are in the hands of self-employed people. Taking those with one employee only, there are over 520,000 establishments which, if the Amendment were accepted, would completely escape the tax.
    10.30 p.m.
    I regard this as a wrecking Amendment. [HON. MEMBERS: "No."] It is a wrecking Amendment because it increases the anomalous exclusions of those who are avoiding the tax already because they have not been brought within its framework, and it would put them in a better position in relation to others competing in the market against them. That is why I say that the Amendment goes the wrong way. It should be an Amendment to include the self-employed man, and it ought not to take the exceptions further.
    I have been rather surprised by the Opposition today. They have failed to

    1379
    seize the chances that the Bill presents. If any case which they have presented is worth calling a case at all, they have taken it the wrong way by their argument. They have missed the strong part of their case. Resolutions of this kind show their weakness in terms of argument. I am no grocer, but I know the saying that a small receptacle full is better than a large one half empty, and it is always better to put the good things to the front. Yet the Opposition have been showing all the bad apples and the rotten stuff. This is another example of it. If they really want to criticise the tax, they should criticise it with reference to those who should be covered by it and who are excluded. They should not try to take the exceptions further still.
    There is no case for excluding the first employee in any establishment. You only make the distinction between those who have to pay the tax in the world of distribution and those who do not more acute and more distressing. For that reason, I suggest that you withdraw the Resolution.
    The Temporary Chairman: Order. First I must remind the hon. Gentleman that we are dealing with an Amendment, not a Resolution. Second, the Chair has nothing whatever to do with it.
    Mr. Winterbottom: Very well, Sir Harry. There is reason in what I am saying even though I have made a mistake in saying it. I withdraw it willingly, but I have said it once, and you know what I mean. If I can get what I believe ought to come out of this tax, I shall not mind making a mistake in terms of order for which I have humbly to apologise. I shall probably continue to make mistakes right till the end of my days when I am given a wooden overcoat.
    What I am pointing out is that hon. and right hon. Members opposite are making mistakes, and the mistake they make on this Amendment is in trying to take the exclusions from the tax too far. Hon. Members opposite are making it impossible for the Government to concede the things which we believe will make the tax operative. Amendments of this kind only waste the time of the Committee, however much we have the opportunity of discussing them, and are
    1380
    out of keeping with the purposes of the Bill.
    I object to the Bill. I am not trying to defend the Government. I am only trying to put the Opposition on the straight and narrow path.
    Mr. Gower: This is a commendable Amendment proposed by my hon. and learned Friend the Member for Buckinghamshire, South (Mr. Ronald Bell) to help the small man or small unit. The hon. Member for Sheffield, Brightside (Mr. Winterbottom) has a bias against the small unit or small man. We on this side have certainly in the past always taken the view that the smaller unit or smaller man should be preferred, though not always in purely economic terms, to the larger unit or larger man. For social reasons, for the good of the community, the small units and small men should be supported. As has been pointed out, it is not to these very small units about which we are speaking that we can look for any significant economies in the use of labour.
    Dame Irene Ward: Do not call us units.
    Mr. Gower: Perhaps I should refer to "smaller persons". It cannot be expected that economies in labour will enable the small decorator to dispense with the services of one of his employees. Reference has also been made to the tourist and holiday industry, which is pertinent in respect of the very small hotel or boarding house.
    I am particularly concerned about this subject because it relates very closely to the problems of the development areas and the areas of depopulation in Scotland, Wales and elsewhere. The hon. Member for Bethnal Green (Mr. Hilton) was referring predominantly to the prosperous areas with a great upsurge in the demands for labour.
    Mr. Hilton: I was speaking on behalf of 20 building unions, and the practice to which I referred is widespread throughout Great Britain.
    Mr. Gower: I am referring to another aspect. In a small town in the north of Scotland or the north of Wales the employment given by a small builder, small decorator or small shopkeeper is vital to the community. The hon. Gentleman has

    1381
    no conception how vital it is. It is all very well to talk in terms of London, Birmingham or other great cities. What about small communities where the outlets for young people are so limited? It is astonishing that the Labour Party, which has always professed such great concern about these areas, should now be so indifferent to their plight.
    Mr. Winterbottom: I am not indifferent to the plight of the small shopkeeper. I have probably dealt with more problems for small shopkeepers throughout this country than the hon. Gentleman has ever known about. I understand the small shopkeeper. I understand the self-employed man. I know precisely what the position is in every part of the country.
    Mr. Gower: That may well be the case. I do not dispute the hon. Member's knowledge of the problems of the small shopkeeper. I am more concerned about the vital importance of the employment provided not only by the small shopkeeper but by the very small factory and other small units.
    I know places in Wales where the units of employment even in industry may be very small. No doubt the position in parts of Scotland is similar. The Government have made a great song and dance about their development area policy and there is a case for considering this tax's relevance to that policy. Sometimes these areas are places which for a generation have suffered a decline in population. I am thinking particularly of Mid-Wales, but again the position is no doubt similar in parts of Scotland.
    In such areas, the avenues of employment are few and we should sustain these smaller units. In a very small village the only place available to a young man may be the local garage, perhaps employing two fitters. How can the proprietor of such a place make such economies as to enable him to dispense with one of his fitters? The Amendment would give valuable assistance to these smaller units—or, since my hon. Friend the Member for Tynemouth (Dame Irene Ward) does not like that term, perhaps I should say, smaller employers.
    Mr. Philip Goodhart: The hon. Member for Bethnal Green (Mr. Hilton) tried to wring our hearts by saying that the Amendment, which was
    1382
    so ably moved by my hon. and learned Friend the Member for Buckinghamshire, South (Mr. Ronald Bell), might lead to evasion in the building industry. That is not likely to produce many tears on this side of the Committee. Later, we shall seek to exempt the whole industry from the tax, thus making the evasion 100 per cent.
    I think that most of us would agree that, in recent years, there has been a strong tide against the small manufacturer and trader in our economy. Increased mechanisation and automation, the increasing price of machinery and the system of wholesale rebates we hear so much about in the retail trade are all putting the small man under pressure.
    Successive Governments, I must admit, have accelerated the process. The Resale Prices Act has done an enormous amount for the consumer, but there is no doubt that it has pressed more heavily on the small trader than on the large merchant concerns. Any small shopkeeper who turned away from the Conservative Party, however, because of the Act, thinking that he would get better protection from the Labour Party, had better think again. The extended credit squeeze has borne far more heavily on the small trader than on the large. Anyone who looks at the satisfies of bankruptcies can see this only too well. Even such an Act as the Offices, Shops and Railway Premises Act, 1965, bears more heavily upon the small shopkeeper and the small manufacturer than it does upon the large business. When it comes to increases in taxation, the burden on the small man is infinitely greater than it is on the large man.
    10.45 p.m.
    In his television speech, after the Budget, the Chancellor talked about a large grocer, or a grocer with a large turnover. He explained how this man's business was going to be remarkably little affected by this tax. The grocer certainly seemed to have a substantial turnover and no doubt was the sort of person who could afford to go to Ascot and lose a certain amount of money each day. I met a small grocer in my constituency who withdrew £700 out of his business last year in order to live. This tax is going to mean an extra £700 to him in the coming year.
    While this tax may mean a check in the profits of Marks and Spencer and Sainsbury's, for the small trader it will mean, not a check in profits, but the complete destruction of his livelihood. My hon. and learned Friend the Member for Buckinghamshire, South referred to the small employer who cannot pass the tax on, the domestic employer, and to the arrangements that have been made in Clause 6 of the Selective Employment Payments Bill.
    Mr. Winterbottom: In the case of the grocer who had to withdraw £700 from his business, can the hon. Gentleman tell us how many employees he had and his turnover per year?
    Mr. Goodhart: I do not wish to do so, as I do not have his permission. The reason why the tax is so heavy on this man is that, like so many other people in the retail trade, he depends very heavily on part-time staff, and this Amendment would be a help to him. If we can get a concession, as we certainly ought, on part-time staff, then his position will be improved. I hope that the hon. Gentleman, with his knowledge of the retail trade, will support Amendments in favour of removing the tax on part-time workers.
    Mr. Winterbottom: If the hon. Gentleman would do me the honour of reading my speech last Thursday he will find that I used a logical argument about part-time workers which he seems to be avoiding. I advocated a reduction in the tax as it applied to part-time workers.
    The Temporary Chairman: Before the hon. Member for Beckenham (Mr. Goodhart) proceeds with his speech, may I say to him that much of the argument he is adducing seems to be more appropriate to the Question, "That the Clause stand part of the Bill" than to this Amendment, which is concerned with the first or only employee.
    Mr. Goodhart: As I was saying, Sir Harry, before I was interrupted, one of the groups most affected by this Amendment is the group which cannot pass on the tax in increased prices or increased anything else—the domestic household which is employing one person in a part-time or full-time capacity to help with the household, perhaps to help to look
    1384
    after the children. Some concession on this point has been given in Clause 6 of the Selective Employment Payments Bill. No doubt we will get to Clause 6 of that Bill at some time in the fairly distant future. But even when we get there we shall find that the relief offered is complex, vague and unsatisfactory.
    Let us consider the position of two women whom I met in my constituency over the week end. Both of them employ part-time domestic help. Under the Government's proposals they would not be entitled to any relief in respect of their domestic staff. One of them suffers from migraine and the other suffers from hay fever. Under the Government's proposals, if one is sick or infirm, one is entitled to relief. Presumably if a person has migraine one week he or she is entitled not to pay the Selective Employment Tax for the domestic help that week. If one suffers from hay fever and the pollen count rises and one begin to sneeze, one is entitled not to pay the Selective Employment Tax for the domestic help that week. A thousand sneezes in a week and one gets one's part-time help free.
    There are a number of ludicrous lines of division which will have to be drawn because of the complicated machinery which the Government propose to introduce. But the simple effective way of dealing with all the anomalies which arise, not only for the small trader, but for those who employ domestic help, can be dealt with by accepting the Amendment so ably moved by my hon. and learned Friend the Member for Buckinghamshire, South.
    Mr. Percy Grieve: I am very grateful for the opportunity of supporting the Amendment of my hon. and learned Friend the Member for Buckinghamshire, South (Mr. Ronald Bell). I base my support for it on the narrow but important ground of the relief which it will give, if accepted, to domestic employers of labour and to those who are so employed.
    The vast majority of people who have any help at home these days are those who are able to have daily help for one, two, three or more days a week. Many such people are desperately in need of this help. Mothers and wives who go out to work need it so that they may

    1385
    make their contribution to the family budget. There are those who will not be catered for by the measure of relief which the Government propose in Clause 6 of the Selective Employment Payments Bill who, for one reason or another, must have help at home. Such people, often managing on a narrow budget, will be gravely hurt and harmed by having to pay this tax on the help which they have at home.
    Perhaps even worse will be the lot of those whom they employ, because many of them, faced by the necessity of having to pay this tax, will have to tell those whom they employ that they can employ them no longer. Many elderly women employed in this capacity as important helps at home will be put out of employment and they will have no other employment to which to go.
    It is ludicrous to pretend, as the Treasury Bench pretended on Second Reading of the Finance Bill, that the tax will drive this kind of person into industry. Such people are quite unfitted to give their labour in industry. The only place where they know how to give their labour and where they are able to give it is in the home. Such people should not be victimised, as these people will be victimised if the Clause goes through in its present form.
    If we in this Committee stand for anything, surely we must stand for those who are weak and unable to look after themselves. Such are the daily women who give their assistance in the homes throughout the country. For this reason, and I put this in the forefront of my argument, the Committee should support my hon. and learned Friend and should pass the Amendment.
    I add a word to my hon. Friends who have cited the case of the small employer of labour in village shops, garages and the like. It is ludicrous to pretend that the assistant to the grocer, to the tobacconist or to the confectioner, or the garage mechanic, will find employment elsewhere. Indeed, the garage mechanic's labour cannot be dispensed with. This is a blow aimed deliberately, as I see it, at the small employer of labour. For these reasons, I support my hon. and learned Friend in his Amendment.
    Mr. Richard Wainwright: Implicit in most of our tax law
    1386
    is a respect for the irreducible minimum. We do not, for instance, levy Income Tax upon the minimum income required for subsistence. For Estate Duty, we exempt the modest competence which most people wish to leave to their families. In the Amendment, we are dealing with an irreducible minimum. I believe that at least the spirit of the Amendment is right in seeking to exempt the only, or the first, employee.
    11.0 p.m.
    I think also that consideration should be given to the fact that those employing only one person, or a small number of people, are likely to gain least advantage from the fact which was announced in the White Paper, that this tax is to be a charge for Income Tax and Corporation Tax purposes. Large employers will in effect bear only about half of the gross cost of this tax, because they will set it against their other—profit—taxes. It is most unlikely that the small employer—leaving aside Members of Parliament and other affluent subjects—will be able to get the benefit of the full set-off against Profits Tax.
    Another advantage of the irreducible minimum, if it is respected, as I hope it will be, in this tax as in existing taxes, is to spare the poor bureaucrat. I hope that the Treasury Ministers have already consulted their collectors of taxes. It is not only the poor inspectors for whom our prayers should go up at the present time, but the collectors. I understand that the collectors of taxes' agonies of collecting Pay-As-You-Earn from small employers are already indescribable, and in witness of that fact they have had to introduce a complete, separate scheme for administering Pay-As-You-Earn in respect of the domestic employers. There is an entirely separate administration for trying to collect Pay-As-You-Earn in all those small cases. The difficulties of collecting S.E.T. from small employers will be no less, and on plain administrative grounds, as well as on grounds of respect for the irreducible minimum, I hope that this Amendment will have the support of the Committee.
    Mr. Ian MacArthur: I should like to return to the point which was at least touched on by my hon. Friend the Member for Barry (Mr. Gower) when he called attention to

    1387
    the effect which this tax in its present form would have on the remoter parts of Britain. I have in mind particularly the Highlands of Scotland, and the more remote country districts generally. The impact on those districts will be particularly severe. I believe that it would be eased considerably if the Amendment moved by my hon. and learned Friend the Member for Buckinghamshire, South (Mr. Ronald Bell) were accepted, or at least if the spirit of it were accepted, in view of the easement which that would bring to the small concern with a single employee.
    It is the small concern with a single employee that provides a large part of the employment in those far-flung places. It is the small concern with a single employee which provides a large part of the services without which life in those remoter parts simply could not continue. And these are the very districts where the Government wish to build up employment, and where, they have maintained, over and over again, that the maintenance of the service industries, and, indeed, their development, will help us attract the manufacturing industry which we wish to see grow there.
    Indeed, this was illustrated not long ago when the Government set up the Highland Development Board with the object of bringing extra employment to the Highlands in service industries and in other industries, too, and it is curious to note now, after all the trumpet blaring there was at the time when the Highland Development Board, which has an annual budget of something like £1 million, was set up, that it will be struggling in the face of a Selective Employment Tax which will take something over £2 million a year out of the very region covered by the Board. This Amendment would remove many of the anomalies which will exist otherwise, by freeing this very important and deserving section of the service industries from the impact of the tax.
    I have in mind the service rendered to those remoter parts of Britain by the small plumber, the small electrician, the small joiner and the like—many of them very small concerns, each with one employee only. The impact on their costs of this tax will be very large. They do not have the same large turnover of the larger concern. They will bear the full impact of the tax, and inevitably it will be reflected
    1388
    in the charges that they make to their customers in the country districts, where living costs already are higher than elsewhere, and in districts where we want to see the population increase.
    It is not only that, because, very often, these small tradesmen are the only employers in the locality. If they are obliged by the tax to squeeze out their single employees, where then will the young lad go for a job? Where will he find his trade?—[Interruption.]—I hear an hon. Member opposite say "Birmingham", and that is just the tragedy of it. One effect of the tax in the Highlands and the remoter districts will be to force people out of the depopulating areas into the crowded Midlands and the South. If the hon. Gentleman believes that that is the right policy, he is flying in the face of his own party. Month after month in the House, members of the party opposite have proclaimed their determination to reverse that process and do everything in their power to increase employment in the Highlands and other remote areas.
    Mr. Winterbottom: The hon. Gentleman questions whether it is the right policy. All I said was that it has been happening for a very long time, apart from the tax.
    Mr. MacArthur: It has been happening for a long time, but that is no reason for making it happen faster now. We want to reverse the process as quickly as possible.
    If a young man cannot find a job in a local tradesman's shop, he joins the march south, never to return. That is the prospect which the Government are building up by the way in which the tax will affect the small remote places.
    I have in mind also the small shopkeeper in a village. In the Highlands, very often the small village shop is operated by a man and his wife, with one employee to drive the shop's van. I live in a remote part by the Highlands myself, and I see the importance of the van to the community in which I live. Since the fuel tax went up, many such vans have left the road. The tax added £9 million to costs in Scotland. The provision of a van is an expensive service; there is very little profit to a small village shop is running a van, sending a man up the glens to sell very small quantities of groceries to a few farmhouses.

    1389
    That is the sort of man who would be the first to go if the tax affected the small shopkeeper in these remote places. That shopkeeper faces all the other burdens resulting from such things as increased rates. He depends on the wholesaler, and he will carry the full burden of the cumulative effects of the tax through the process of distribution. He will have to look for economies, and the first one will be in the part-time girl behind the counter or the lad who drives his van.
    There is another category in these remote districts, and perhaps it is one of the most pressing. I have in mind the small farmer whose operation is just large enough to support one employee. There are many such farms in Scotland and, I have no doubt, in England and Wales, too. In order to continue, the farmer has to have one man on whom he can rely. It applies particularly to the small dairy farm, where the farmer must have someone to carry on the work with him.
    The impact of the tax on that small operator will be very severe. The small farmer is already suffering, with increased costs, falling returns and restricted credit. Now he is to be called upon to make an interest-free loan for a period of months at a time when his returns are desperately low. It will come at the worst time of the year for him to find extra money. The pressure on him to cut his costs by taking the last step of getting rid of his sole employee will be, alas, economically tempting.
    I believe that, by accepting the spirit of the Amendment, the Government have a real opportunity to assist themselves in carrying through policies for the remoter parts of Britain which they have proclaimed constantly and which, just as constantly, they have overturned by their actions.
    Mr. Eldon Griffiths: As a Member for a country constituency, and concerned above all with the lives of elderly people in remote rural villages, I support the Amendment.
    I should, however, like to comment on two of the speeches made from the benches opposite. First, that of the hon. Member for Sheffield, Brightside (Mr. Winterbottom), for whose experience I have great respect. His thesis was that those who have been left out of this tax ought in all honesty to be brought in.
    1390
    It seems to me that this is rather a new doctrine of taxation, namely, that he who is not eligible to pay tax under the law is a tax evader. I find this a most extraordinary doctrine, but that is what the hon. Gentleman said.
    Mr. Winterbottom: The point is that the tax is for service industries. By far the largest section of the distributive section of service industry is not paying the tax. It is, therefore, avoiding the tax, and that is the position that we have to face. I am saying that the whole industry should pay the tax if equity is to be established.
    Mr. Griffiths: I fear that the hon. Gentleman has failed to meet the point that I was on. He has said that those who are not caught up within the Government's tax legislation are evaders; but they are the fortunate people. Surely the right answer to tax evasion is not more tax, as the hon. Gentleman proposes, but less tax. That is the view taken by this side of the Committee.
    The hon. Gentleman then had a go at the lawyers. I am glad that he did, because, being made aware of it, they will be able to meet his point in their law journals.
    The hon. Member for Bethnal Green (Mr. Hilton) had previously had a go at the builders. As I understood the hon. Gentleman's case, he painted a picture of the people in the building industry as a race of tax evaders. I find this very odd at a time when the Minister of Housing and Local Government says that he is trying to restore to the building industry the confidence which he has just knocked out of it. The hon. Gentleman has not helped his right hon. Friend by suggesting this evening that the whole race of builders in this country is conspiring to evade taxes. I regard that as a slur, and I hope that the hon. Member for Bethnal Green will withdraw it.
    Mr. Winterbottom Mr. Winterbottom rose—
    Mr. Griffiths: I think that the hon. Member for Bethnal Green can withdraw it himself.
    The case that I have to make on behalf of the Amendment is on compassionate grounds, and for the people in remote rural villages. I am concerned about the effect of this tax on the elderly person

    1391
    who earns a few pounds as a gardener and thereby keeps his pride and his health long after he has reached the age of retirement, but who will find himself put out of a job by the application of this tax.
    I am concerned about the effect on a disabled person, and I am thinking here of one man who is a gardener. He is 68, and he has one leg. It has not been possible to provide him with an artificial limb. He hops about the garden, and he does a tremendous job looking after the flower beds and the vegetable garden. He can hardly be justified as an economic proposition. He is kept in his job because of a quality which I am sure the Chancellor would not wish to exclude from our society, namely, kindness, and there is no fiscal sum that one can place on the quality of kindness.
    I suggest that the application of this tax at 25s. will make it impossible for this man, who lost a leg in the First World War, to be kept on in that garden which he loves, and where he has his pride. He will be sacked. He will be thrown on to the rubbish heap. I believe that as a human being the Chancellor does not intend this, but, nevertheless, this is what he will achieve.
    I am concerned, too, about the effect of the tax on the working wife who employs an older woman to look after her children while she goes to work. Under the Amendment she will be able to continue to do this. If the Amendment is not accepted, it will not be possible for an able-bodied woman to go out to work, because it will no longer be possible for her to pay an older woman to look after her children while she is at work. The net result will be a loss to industry of one able-bodied woman.
    11.15 p.m.
    I would like to quote two specific examples from my own constituency. One is from the very remote Suffolk village of Ashington Green. There it is extremely difficult to get milk delivered to the remote Suffolk cottages, particularly in the winter time. The reason is very simple. The distances are long and the costs are high and with the petrol tax recently it has become uneconomic for the Co-operative Wholesale Society in particular to deliver that milk. Delivery now depends, or
    1392
    it did until recently, on one man with one employee. If this Amendment is accepted it will be possible to deliver milk to people of 80 and 90 in these villages. If this Amendment is refused it will be impossible to deliver that milk, and again I wonder if the Chancellor really intends this.
    I turn to another specific example of a man of 80 in the village of Exning who wrote to me and said that he had had working for him as companion, close friend and nurse for 42 years an elderly woman. He is like so many others, a member of the group that I would call the "new poor", the people who live on small fixed incomes who have no trade unions to protect them and who have had inflation biting away at their incomes as well as having their rates go up, higher food prices, fuel costs and the rest. Here is a man who is suddenly asked to pay from his tiny income 25s. a week, which he cannot possibly afford, to keep in his home to look after him a woman who has been with him for 42 years. He will have to sack her. It is not just economics. He will have to sack her and something will go from that man when he throws that woman out of the home she has loved for 42 years. He does not want to do so and she does not want to go but he has not got the 25s. to pay the tax.
    What will happen in this case? Almost certainly if he loses his companion of a lifetime, he will have to go into an old people's home and the State will have to find labour and money to look after him. The net result will be to add to the labour bill of the nation as a whole. He will be a charge upon the public whereas, at the moment, he is independent and happily so.
    What is to happen to the elderly woman who has looked after him for 42 years and has been discharged? What will she do and where will she go? It is no use saying that in a remote Suffolk village a woman who has looked after an elderly man for 42 years will go into a factory. There is no factory for her to go into. She has no training. The one thing she can do is look after a man who was her employer and her friend. The Chancellor will cause this couple, who have lived together, one helping the other for years, to split up. Is that what he intends in the name of economics?

    1393
    I believe he has achieved the precise opposite of what he intends.
    For these reasons, as a Member for a country constituency, I support the Amendment. I hope that the Chancellor will recognise that those who employ a single person working in their homes, in their gardens and in their businesses are doing something far more important than is represented by the miserable sum that the Chancellor may be able to extract in the name of these perverse economics.
    Mr. Rees-Davies: In this Amendment we seek to exclude the sole employee. I want to take one or two, I hope, fairly new points. They have been trespassed upon in part in the country areas by the hon. Member for Bury St. Edmunds (Mr. Eldon Griffiths).
    The hon. Member for Sheffield, Bright-side (Mr. Winterbottom), who has sat here through practically the whole of this debate, made, if I may say so, an able contribution on the Second Reading of the Selective Employment Payments Bill which I listened to with great interest. The hon. Member has not been entirely accurately represented. He shares my view that basically we ought to have had a poll tax—certainly a tax applying to everybody. Had there been a tax at a low level on everyone, self-employed included, we should not have had the troubles of this debate. It is the selectivity of this tax which has aroused the opposition, and a very good example is contained in the Amendment.
    No one has dealt with the astonishing situation about home helps. In my constituency several thousand people are dependent on domestic home helps. Partly they are paid for by the individual concerned, who pays 5s. an hour, probably 50s. for 10 hours a week. Those who employ home helps are elderly people who simply must have these home helps in order to operate their household, otherwise their health would suffer severely. Under this tax, if the home help is male they must pay an extra 25s. a week, which is ridiculous. If the home help is female, they must pay an extra 12s. 6d. a week, which means that they will have to reduce the number of hours assistance by the equivalent of 12s. 6d., which is 2½ hours. If the number of hours is not reduced, the Kent County Council or the Greater London
    1394
    Council or the Government will have to make up the difference to the home helps through National Assistance or the agencies of the councils, because they are being subsidised in part by the Government and in part by the county.
    This is another illustration of the Treasury's miserable incompetence, their lack of humanity, and the appalling incompetence of the agencies advising the Government in this case. The civil servants and those who have been advising the Chancellor have not applied their minds, until now, to the ordinary simple facts of human life. It is not good enough that Dr. Balogh and this other bunch of foreigners who have been advising the Chancellor should take over this country, too.
    It has hit the tourist industry from top to bottom—from the top, where they are running major associations, down to those responsible for the agencies at county level; the Co-operative movement, on the one hand, and the small traders, on the other hand; and the local councillors who have to provide the home helps. They are all sick to death with the Government and with this tax.
    I have had opportunities to meet those associated with every aspect of this industry. There is not one who is not highly critical of the way in which the tax has been dealt with. Widows and widowers, peers of the realm who guide the industry in its upper echelon—at all levels they would be content to pay a poll tax or a turnover tax, whether placed on the employer or on the individual. What infuriates one and all in this country—and it will be borne in upon civil servants and the Government sooner or later—is that the Government go on hitting the old and the poor with an unkind tax and go on hitting the tourist industry in every possible way, by taking away investment allowances, by imposing a Selective Employment Tax, by charging it on their part-time labour, and by refusing to make any concessions. The Government are acting in a shameful way and, sooner or later, the country will rise and tell them so. I am saying now what will soon be said by hundreds of thousands of people.
    If right hon. Gentlemen opposite will listen to those who are concerned with the distribution industry and industry

    1395
    generally they might apply their minds to this matter. If one has a tax which is to be equitable, the first thing one must look at is the method by which the tax will be imposed on one citizen as compared with another. Leaving companies out of the argument for a moment, one must ensure that the tax is equitable as between citizens. How can the Government argue that a tax the impost of which is exactly the same on an elderly person—who must pay, out of a very small income, for a home help, domestic or nurse—as on industry generally is equitable? In the first case, a much higher percentage of the elderly person's income goes in the tax compared with industry, which pays on the basis of an average level of earnings of £20 a week. An old-age pensioner who must pay 50s. a week for a home help is obviously paying a higher percentage of his or her income than industry in respect of the average earnings of a labourer at £20 a week.
    This is a simple matter of arithmetic. As has been pointed out from the Liberal bench, when considering Income Tax, Surtax or any other tax, one must bear in mind the relative burden on the individual. My hon. and learned Friend the Member for Buckinghamshire, South (Mr. Ronald Bell) was absolutely right when he said that one way of dealing with this issue would be to exclude from the impost of this tax the employer who employs only one person.
    Many hon. Members have spoken on this subject. I have dealt with another aspect of it. I beg the Government—remembering that they did not even bother to reply to my earlier remarks on the tourist industry; the Chancellor was not here and the Treasury Minister present apparently did not bother to report my remarks to him—to give serious attention to this matter now. I speak with anger and sincerity. I speak this way because I have taken the trouble in the last few weeks to learn the case being put by the tourist industry from one end of the industry to the other. I tell the Government here and now that if they do not wake up to these problems soon they will have the whole tourist industry howling around them like a pack of wolves. It is about time hon. and right hon. Gentlemen opposite woke up and listened.
    The Financial Secretary to the Treasury (Mr. Niall MacDermot)The Financial Secretary to the Treasury (Mr. Niall MacDermot) rose—
    Hon. Members: No.
    Mr. MacDermot: I am not seeking to stop the debate and——
    Several Hon. Members Several Hon. Members rose——
    Mr. MacDermot: —I have no power to do so. I have been listening with great interest, for about one and three quarter hours, to the arguments which have been adduced in favour of the Amendment and I thought it might assist the Committee if I were now to state the Government's view. The Amendment is within a fairly narrow compass. There has been a certain amount of forceful repetition of the arguments—[Interruption]—and I am sorry if hon. Gentlemen opposite think that I am intruding in the debate unduly early. I am seeking to reply to them.
    The hon. Member for the Isle of Thanet (Mr. Rees-Davies) expressed anger that we had not replied to his arguments on behalf of the tourist industry.
    Dame Irene Ward: Hear, hear.
    Mr. MacDermot: I remind the hon. Gentleman that an Amendment has been selected by the Chair specifically dealing with the problems of the tourist industry, and I should like to advise the Committee at this stage that I do not seek, in the few remarks I will make, to deal with some of the wider questions which will be the subject of special Amendments later.
    One hon. Gentleman spoke particularly of the problems of the Highlands—the question of special areas, development districts and areas of high unemployment—but, in the fullness of the night, we will come to that subject on later Amendments. What I shall seek to address my remarks to are the particular issues raised by this Amendment.
    11.30 p.m.
    Mr. MacArthur: The hon. and learned Gentleman says that we shall come to the question of employment in the Highlands in later proceedings on the Finance Bill, but that will not necessarily be in connection with this one limited point of the single employer in

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    the Highlands, which I hope that he will answer.
    Mr. MacDermot: I shall deal with the problem of the single employer throughout the country, whether in the Highlands or elsewhere.
    We have heard arguments adduced on the subject of part-timers, on a payroll tax and so forth. I shall seek to deal with what the hon. and learned Member who moved the Amendment called the single and simple point raised by this Amendment. I say at the outset, and I will explain this more fully later, that besides being single and simple, what is proposed would be unworkable. What is proposed is that we should reduce the tax to a nominal rate of one penny for an employer who has only one employee and the same nominal rate for what he calls the first employee in other cases. I appreciate that his reference to one penny is to keep within the rules of order. What we are really discussing is an exemption for such people.
    There are two questions. One is whether we should make an exemption of this amount. The second is whether we can. First on whether we should, broadly speaking there are two classes whose case has been argued. One is the employer of domestic labour, domestic servants. The second is that of the small man in business who has only one or a few employees. There are, I understand, something of the order of 360,000 domestic servants in the country. We have heard particular cases argued of particular hardship, but many of those are employed by people to whom it would be no real hardship to pay this tax. We do not see a reason why the whole of that class should be exempted. What is argued is particular cases of hardship.
    The hon. and learned Member who moved the Amendment not unnaturally anticipated that my reply to this would be that many of the cases of hardship we have heard argued in such moving terms in the Committee are already met by provisions which we shall discuss later, be it next week or whenever it is, on the Selective Employment Payments Bill. That provides for repayment of the tax in respect of nursing and domestic assistance in a household where there is an old person—anyone over 70, which would meet the case mentioned concerning a man
    1398
    in his 80s—a person who is infirm, or a person who is incapacitated or sick, which would include a woman who is pregnant. These provisions will cover most if not all the cases of home helps about which the hon. Member for the Isle of Thanet spoke, cases where there is a child or children of a single parent and where that parent himself or herself is working. It would cover the case of the working widower who has children to support. These cases we are seeking to meet by means of the repayment system.
    Dame Irene Ward: It would not be in order to discuss Clause 6 of the Selective Employment Payments Bill, but I have obtained a copy from the Vote Office and I find that it is loosely drawn. Would the hon. and learned Gentleman be in order in laying such emphasis on this Clause because I would riddle it through one hundred times in so far as it concerns definition.
    Mr. MacDermot: No doubt the hon. Lady will riddle it through or seek to when we discuss it at the appropriate time. I am seeking to remind the Committee of the provisions contained in that Bill which hon. Members opposite were very anxious should be before the House when we discussed this present Bill, because of its obvious relevance.
    The other case is that of retail shopkeepers——
    Mr. Eldon Griffiths: Would the hon. and learned Gentleman accept that to say to an old person of 80 that he must wait six months is a much more difficult thing than to say it to a much younger person?
    Mr. MacDermot: I appreciate that difficulties may arise over the question of the interval period. Incidentally, it is not quite six months; it is five months. [Interruption.] Well, let us be accurate. All I am seeking to point out is that the claim for an exemption from this tax was argued on the basis of the great weight with which this tax was going to bear on these people. In fact, provision is made for repayment.
    The second category of which we heard was that of the retail shops in particular and other small employers. As my hon. Friend the Member for Sheffield, Bright-side (Mr. Winterbottom) pointed out earlier in the debate, the self-employed

    1399
    person is exempt already, and, of course, very many of the small employers whose case has been argued here will be people who are themselves working in the business in a self-employed capacity, and who therefore will not be paying any tax in relation to their own labour.
    What we are seeking to do, as has been made plain in the Second Reading debate, in the Budget debate itself and in all the debates that we have had in connection with this tax, is to broaden the tax base and to spread it wide, in the form of a low percentage tax. We do not see any justification for exempting from the scope of this tax people who employ one employee, or for exempting the first employee for all employers.
    My hon. Friend the Member for Brightside gave some figures—I am unable to confirm them; I do not know their source—showing what a high percentage of retail units are, in fact, self-employed persons as he argues. He may well be right. But in any event, whatever the precise figures may be, clearly a very high percentage of people engaged in the retail trade are small shopkeepers.
    If we are to choose a tax which is going to spread the tax burden beyond the areas which at the moment some feel are bearing a disproportionate burden, and to spread it widely over the whole field of services, there is no reason in logic for excluding the small employer and the small business. The hon. and learned Member for Buckinghamshire, South (Mr. Ronald Bell) asked what is the social and industrial policy which my right hon. Friend the Chancellor is seeking to pursue. It is precisely that of enlarging the tax base.
    A number of hon. Members argued in favour of the Amendment, as they believed that it would save a lot of administrative work and that it would be administratively workable. I assure those hon. Members that such is not the case. In fact, the position is that the Ministry of Pensions and National Insurance, when examining the contribution card of a particular employee, which is what they will have to do when it is returned to them, would be quite unable to tell from the card whether the employee was the first or only employee
    1400
    of a particular employer. They would not know from the card who the employer was. Many of these employees will not remain with one employer throughout the whole of the year. They will change employers. So the only way they could check would be, first of all, by getting in touch with the employee and finding out who were his employers during particular periods of the year and then checking with the employers as to how many employees they had during that period. It will be obvious to hon. Members that quite patently this would not be a workable scheme.
    Mr. Turton: Does not the Financial Secretary agree that every time an employer sends in his quarterly return of cards, he has to send in a form showing how many employees he has? Therefore, the National Insurance office must know from that return the number of employers who have got only one employee.
    Mr. MacDermot: That may be done for purely statistical purposes, but it does not help for this purpose. There are no records kept of the identity of particular employers or of particular employees in relation to them. An employer may have only one employee when making a return, but when he produces the card later that year, it may not relate to a particular employee who has been in his service throughout this period of employment.
    We are concerned with whether an effective check can be made by the Ministry of Pensions and National Insurance when it receives the card at the end of one year's period, when an employee may have been working for many different employers. This is why the only distinction that can be made is in relation to particular types of employee, not in relation to particular types of employment or employers, or the number of employees there are, or the particular category of business the employer is conducting.
    Nor would it be true that all that would be required is one additional type of stamp. There would be required an extra rate for each different insurance category affected by the tax, and some 10 or more rates would be required in addition to the present range of over 30 different types of stamp.
    Mr. Goodhew: The hon. and learned Gentleman has just said it is possible to differentiate between the type of employee, but not between the employers, and therefore it would not be possible to make exemptions for these employers of individual workers. If this is so, how is he going to find out to whom he should make his rebate in the categories of the old or infirm, or the others he has mentioned?
    Mr. MacDermot: We are discussing exemptions from the tax, not the categories for rebate. I referred to the other Bill only in order to point out that some of the particular hardship cases which have been quoted in support of the principle of this Amendment are being met either in whole or in part in the other Bill, and whereas some reliefs can be made and are practicable on administrative grounds in the other Bill, what I am seeking to do is to refute the argument of hon. Members who suggest that this Amendment would be (a) workable, and (b) would lead to simplicity in administration of the tax. Neither is correct.
    Mr. St. John-Stevas: I should first like to congratulate the hon. Member for Bury St. Edmunds (Mr. Eldon Griffiths) on having made such a humane, well-informed and relevant contribution to the debate just before the Financial Secretary replied. The contrast between that speech by my hon. Friend, which was based on the facts of life, and the academic dissertation inflicted on us by the Financial Secretary was extraordinary.
    I pass from him to the hon. Member for Sheffield, Brightside (Mr. Winter-bottom) who, without any shadow of justification, attacked my right hon. Friend the Member for Thirsk and Malton (Mr. Turton) for his speech on the grounds that it had nothing to do with reality. In fact my right hon. Friend was dealing with the hardship and suffering that will be caused to old people if this Amendment is rejected and his speech, far from being remote from reality, was directed right at the very heart of this matter and right at the heart of the motivation of the Opposition in moving this Amendment.
    The attitude shown by Government Members towards the problems, hardship and suffering which the tax will create is most significant, as significant as the
    1402
    deserted benches opposite showing government supporters' lack of concern for these vital matters.
    11.45 p.m.
    One sees also the re-emergence of the tax avoidance syndrome in the speeches of the hon. Member for Brightside and his companion the hon. Member for Bethnal Green (Mr. Hilton). The hon. Member for Bethnal Green seemed to resist the Amendment on the rather novel ground that everyone could avoid taxation through it except the "co-ops". The conclusion must be that, if the "co-ops" could avoid taxation, his objection would melt away. This is a curious moral standpoint, even coming from one of the Co-operative Members whom we have seen going through such extraordinary moral contortions tonight in order to reconcile their conscience and duty to the Co-operative movement with their party loyalty to the Labour Government.
    Mr. Hilton: I made the point that I believed that this tax, in the way it was being imposed, would lead to greater evasion, and this was not something which I wished to see in legislation. I said, further, that the Co-operative movement would not be able to have recourse to the same evasion and this would make it more difficult for the movement in the problems which it faces now.
    Mr. St. John-Stevas: The hon. Gentleman has got himself into a moral muddle, and it is completely beyond my capacity to help him emerge from it.
    The point of the Amendment which interests me is not that which concerns the Co-operative movement but that which concerns the sick, the old and the handicapped of every kind. I think of those in the constituency of every hon. Member of the Committee who need a nurse, a companion or a housekeeper to look after them. This is not a luxury. For these people, our constituents, it is a necessity. One test of the real value of a civilisation lies in its attitude to the old and the handicapped. The callous attitude of the Government to these people as revealed in their rigid application of the Selective Employment Tax is an interesting gloss on the important speech made over the weekend by my

    1403
    right hon. and learned Friend the Member for St. Marylebone (Mr. Hogg) in Flintshire.
    Mr. Winterbottom: This matter concerns the sick, the disabled and others like that. I readily accept that. But it also covers self-employed people who will not pay the tax, and it covers hundreds of thousands who will be first employees of self-employed people who also would not be subject to the tax. This is one of the contradictions emerging from the agreement in terms of argument between the hon. Member for the Isle of Thanet (Mr. Rees-Davies) and myself.
    Mr. St. John-Stevas: That does not affect my argument in the slightest. If that is the case, it is an additional argument for the Amendment, not one against it.
    I return to what my right hon. and learned Friend the Member for St. Marylebone said in graphic terms about the moral decay of the nation brought about by the financial and economic policies of the present Government. This is not the place to continue that analysis, but the way the Government have applied this tax well illustrates their attitude of moral irresponsibility which is crystallised in every action and utterance of the Prime Minister, whose behaviour now seems to have infected the Treasury Bench.
    We know that in the next Bill, which is to have its Committee stage soon, provision will be included for a refund. But the point of the Amendment is that there is still very real hardship because there is an interval between payment and refund which people on very low incomes cannot afford to bear. It is typical of the academic approach of the Government and the Financial Secretary in particular that the hon. and learned Gentleman has failed to appreciate this point. The people that I am talking about are people with very small incomes, with a tiny amount of savings already eroded by inflation, and with no facilities for borrowing money.
    We have all had letters on this subject, and I have had a number, and I make no apology for reading one from
    1404
    a constituent in Chelmsford because I hope that it will bring to the Financial Secretary a breath of reality. It reads:
    "I am a retired head postmaster in my 88th year, a widower, and in frail health necessitating skilled nursing. Since the death of my wife eight years ago I have employed a state enrolled auxiliary nurse who also kindly acts as my housekeeper. This has involved, on my part, strict economy, much self-sacrifice, and annual withdrawings from my, rapidly diminishing, savings. I am now harassed and dismayed at the prospect of having to find 12s. 6d. a week to meet the proposed payroll tax."
    These are the authentic words of a person who is typical of many thousands throughout the country who have been plunged into deepest anxiety by the tax. These are the people who, if the Bill is not amended, will have to make a five-months' interest-free loan to the Treasury and thereafter at three-monthly intervals loans of a similar character. Even Scrooge, I think, might have shrunk from such an outcome.
    The Chancellor has expressed his ambition to be remembered as a great reforming Chancellor, a sort of 20th century Gladstone. He may well be remembered, but it will not be for that reason, because the Gladstone Budgets are remembered as Budgets which swept away anomalies, restrictions and injustices of every kind, whereas this Budget will be remembered, and the present Chancellor in particular, for imposing more injustices and anomalies than any of his predecessors within living memory.
    The Amendment drafted by my hon. Friend is an ingenious one, and I congratulate him on his ingenuity, but I congratulate him much more because his ingenuity is exercised in a good cause—to relieve from extra burdens those in our society who are least fitted to bear them because they are already handicapped by age or infirmity. It is not an official Amendment, but because it seeks to do that I know that it will have the united support of the entire Opposition.
    The Treasurer of Her Majesty's Household (Mr. John Silkin)The Treasurer of Her Majesty's Household (Mr. John Silkin) rose in his place and claimed to move, That the Question be now put.
    Hon. Members: No.
    The Chairman: Order.
    Several Hon. Members Several Hon. Members rose——
    The Chairman: Order. The Question is——
    Several Hon. Members Several Hon. Members rose——
    The Chairman: Order.
    Question put, That the Question be now put:—
    The Committee proceeded to a Division—
    Hon. Members: No.
    Sir J. Eden: It is disgraceful. On a point of order. Sir Eric——
    Mr. Eldon Griffiths: On a point of order——
    Mr. Geoffrey Hirst: On a point of order——
    Mr. William Hamilton: On a point of order——
    The Chairman: Order. [Interruption.] Order. After a Division has been called I cannot listen to a point of order unless the hon. Member is seated and covered.
    The Committee divided: Ayes 163, Noes 114.

    Division No. 61.]

    AYES

    [11.54 p.m.

    Allaun, Frank (Salford, E.)

    Gordon Walker, Rt. Hn. P. C.

    Mulley, Rt. Hn. Frederick

    Allen, Scholefield

    Gregory, Arnold

    Noel-Baker, Rt.Hn.Philip(Derby,S.)

    Archer, Peter

    Grey, Charles (Durham)

    Oakes, Gordon

    Armstrong, Ernest

    Griffiths, David (Rother Valley)

    Ogden, Eric

    Atkinson, Norman (Tottenham)

    Griffiths, Will (Exchange)

    O'Malley, Brian

    Bagier, Gordon A. T.

    Hale, Leslie (Oldham, W.)

    Orme, Stanley

    Barnes, Michael

    Hamilton, James (Bothwell)

    Owen, Dr. David (Plymouth, S'tn)

    Barnett, Joel

    Hamilton, William (Fife, W.)

    Owen, Will (Morpeth)

    Benn, Rt. Hn. Anthony Wedgwood

    Hannan, William

    Paget, R. T.

    Bennett, James (G'gow, Bridgeton)

    Hattersley, Roy

    Parker, John (Dagenham)

    Binns, John

    Hazell, Bert

    Pavitt, Laurence

    Bishop, E. S.

    Heffer, Eric S.

    Pentland, Norman

    Blackburn, F.

    Henig, Stanley

    Perry, Ernest G. (Battersea, S.)

    Boardman, H.

    Hilton, W. S.

    Perry, George H. (Nottingham, S.)

    Booth, Albert

    Hooley, Frank

    Prentice, Rt. Hn. R. E.

    Braddock, Mrs. E. M.

    Houghton, Rt. Hn. Douglas

    Price, Christopher (Perry Barr)

    Bray, Dr. Jeremy

    Hoy, James

    Rankin, John

    Brooks, Edwin

    Hughes, Emrys (Ayrshire, S.)

    Redhead, Edward

    Brown, Rt. Hn. George (Belper)

    Hunter, Adam

    Reynolds, G. W.

    Brown, Hugh D. (G'gow, Provan)

    Hynd, John

    Richard, Ivor

    Brown,Bob(N'c'tle-upon-Tyne,W)

    Jackson, Peter M. (High Peak)

    Roberts, Albert (Normanton)

    Brown, R. W. (Shoreditch & F'bury)

    Jay, Rt. Hn. Douglas

    Robertson, John (Paisley)

    Callaghan, Rt. Hn. James

    Jenkins, Hugh (Putney)

    Robinson, Rt.Hn.Kenneth(St.P'c'as)

    Carmichael, Neil

    Johnson, James (K'ston-on-Hull, W.)

    Robinson, W. O. J. (Walth'stow, E.)

    Coe, Denis

    Jones, Dan (Burnley)

    Roebuck, Roy

    Coleman, Donald

    Jones,Rt.Hn.Sir Elwyn(W.Ham,S.)

    Rogers, George

    Conlan, Bernard

    Jones, J. Idwal (Wrexham)

    Rose, Paul

    Corbet, Mrs. Freda

    Judd, Frank

    Shaw, Arnold (Ilford, S.)

    Craddock, George (Bradford, S.)

    Kelley, Richard

    Shore, Peter (Stepney)

    Crawshaw, Richard

    Kenyon, Clifford

    Short,Rt.Hn.Edward(N'c'tle-u-Tyne)

    Cullen, Mrs. Alice

    Lestor, Miss Joan

    Silkin, John (Deptford)

    Dalyell, Tam

    Lever, Harold (Cheetham)

    Silkin, S. C. (Dulwich)

    Davidson, Arthur (Accrington)

    Lever, L. M. (Ardwick)

    Silverman, Julius (Aston)

    Davies, Dr. Ernest (Stretford)

    Lewis, Ron (Carlisle)

    Slater, Joseph

    Davies, G. Elfed (Rhondda, E.)

    Lomas, Kenneth

    Small, William

    Davies, Ifor (Cower)

    Loughlin, Charles

    Summerskill, Hn. Dr. Shirley

    Davies, Robert (Cambridge)

    Luard, Evan

    Taverne, Dick

    Dell, Edmund

    Lyon, Alexander W. (York)

    Tinn, James

    Dempsey, James

    Lyons, Edward (Bradford, E.)

    Urwin, T. W.

    Dewar, Donald

    MacDermot, Niall

    Walden, Brian (All Saints)

    Diamond, Rt. Hn. John

    Macdonald, A. H.

    Walker, Harold (Doncaster)

    Dickens, James

    McGuire, Michael

    Watkins, David (Consett)

    Doig, Peter

    McKay, Mrs. Margaret

    Wellbeloved, James

    Dunnett, Jack

    Mackenzie, Gregor (Rutherglen)

    Wells, William (Walsall, N.)

    Dunwoody, Mrs. Gwyneth (Exeter)

    Mackie, John

    Whitaker, Ben

    Dunwoody, Dr. John (F'th & C'b'e)

    Mackintosh, John P.

    White, Mrs. Elrene

    Eadie, Alex

    Maclennan, Robert

    Whitlock, William

    Edelman, Maurice

    McNamara, J. Kevin

    Williams, Clifford (Abertillery)

    Faulds, Andrew

    Manuel, Archie

    Wilson, William (Coventry, S.)

    Fernyhough, E.

    Mapp, Charles

    Winnick, David

    Finch, Harold

    Mendelson, J. J.

    Winterbottom, R. E.

    Foley, Maurice

    Molloy, William

    Woof, Robert

    Ford, Ben

    Moonman, Eric

    Fraser, John (Norwood)

    Morris, Alfred (Wythenshawe)

    TELLERS FOR THE AYES:

    Gardner, A. J.

    Morris, Charles R. (Openshaw)

    Mr. Harper and

    Moyle, Roland

    Mr. Walter Harrison

    NOES

    Allason, James (Hemel Hempstead)

    Batsford, Brian

    Biggs-Davison, John

    Astor, John

    Bessell, Peter

    Black, Sir Cyril

    Baker, W. H. K.

    Biffen, John

    Blaker, Peter

    Boyd-Carpenter, Rt. Hn. John

    Hirst, Geoffrey

    Onslow, Cranley

    Boyle, Rt. Hn. Sir Edward

    Hogg, Rt. Hn. Quintin

    Orr-Ewing, Sir Ian

    Brinton, Sir Tatton

    Holland, Philip

    Page, Graham (Crosby)

    Brown, Sir Edward (Bath)

    Hooson, Emlyn

    Pardoe, J.

    Bruce-Gardyne, J.

    Hordern, Peter

    Peel, John

    Campbell, Gordon

    Howell, David (Guildford)

    Percival, Ian

    Carlisle, Mark

    Hunt, John

    Pink, R. Bonner

    Channon, H. P. G.

    Iremonger, T. L.

    Pounder, Rafton

    Chichester-Clark, R.

    Jenkin, Patrick (Woodford)

    Price, David (Eastleigh)

    Clark, Henry

    Jopling, Michael

    Ramsden, Rt. Hn. James

    Clegg, Walter

    Kimball, Marcus

    Rees-Davies, W. R.

    Cooke, Robert

    King, Evelyn (Dorset, S.)

    Renton, Rt. Hn. Sir David

    Corfield, F. V.

    Kirk, Peter

    Ridley, Hn. Nicholas

    Cunningham, Sir Knox

    Kitson, Timothy

    Ridsdale, Julian

    Davidson, James(Aberdeenshire, w.)

    Knight, Mrs. Jill

    Roots, William

    Deedes, Rt. Hn. W. F. (Ashford)

    Lambton, Viscount

    St. John-Stevas, Norman

    Dodds-Parker, Douglas

    Lancaster, Col. C. G.

    Scott, Nicholas

    Eden, Sir John

    Langford-Holt, Sir John

    Sharples, Richard

    Fortescue, Tim

    Longden, Gilbert

    Smith, John

    Foster, Sir John

    Loveys, W. H.

    Steel, David (Roxburgh)

    Garrow, Alex

    Lubbock, Eric

    Taylor, Sir Charles (Eastbourne)

    Glover, Sir Douglas

    Mac Arthur, Ian

    Thatcher, Mrs. Margaret

    Goodhart, Philip

    Mackenzie, Alasdair(Ross&Crom'ty)

    Thorpe, Jeremy

    Goodhew, Victor

    Maclean, Sir Fitzroy

    Turton, Rt. Hn. R. H.

    Gower, Raymond

    Macleod, Rt. Hn. Iain

    Wainwright, Richard (Colne Valley)

    Grant-Ferris, R.

    McMaster, Stanley

    Walker, Peter (Worcester)

    Grieve, Percy

    Maddan, Martin

    Walker-Smith, Rt. Hn. Sir Derek

    Griffiths, Eldon (Bury St. Edmunds)

    Maude, Angus

    Ward, Dame Irene

    Grimond, Rt. Hn. J.

    Maxwell-Hyslop, R. J.

    Weatherill, Bernard

    Hamilton, Marquess of (Fermanagh)

    Mills, Peter (Torrington)

    Webster, David

    Harvey, Sir Arthur Vere

    Miscampbell, Norman

    Whitelaw, William

    Hastings, Stephen

    Mitchell, David (Basingstoke)

    Winstanley, Dr. M. P.

    Hawkins, Paul

    More, Jasper

    Younger, Hn. George

    Heald, Rt. Hn. Sir Lionel

    Munro-Lucas-Tooth, Sir Hugh

    Higgins, Terence L.

    Murton, Oscar

    TELLERS FOR THE NOES:

    Hiley, Joseph

    Nott, John

    Mr. Pym and Mr. Grant.

    The Chairman: Amendment proposed——
    Mr. Eldon Griffiths: On a point of order.
    The Chairman: Order. No point of order can arise until the Question has been put.
    Question put accordingly, That the proposed words be there inserted: —
    The Committee proceeded to a Division—
    Mr. Eldon Griffiths(seated and covered): On a point of order. After the Division began some 10 minutes ago, I sat here with this hat on my head and sought to engage your attention, Sir Eric. There was so much noise and confusion in the Chamber that it was impossible, I quite see, for you to appreciate that I was seeking to raise this point of order.
    Therefore, with your permission I will raise it now.
    I could not hear the Motion put by the Treasurer of Her Majesty's Household. It was impossible for us, Sir Eric, to tell what point he was on. All that I could tell was that the First Secretary entered the Chamber, interrupted our discussion, and no sooner had he appeared than the Question was put. I protest at this disgraceful invasion of the Committee. The First Secretary has sat through not one minute of our debate. He came in and sought to bring it to an end. I think that it is necessary that, even when there is noise in the Chamber, hon. Members should be able to hear what is proposed.
    The Chairman: Whether an hon. Member sits throughout the debate or not is not a point of order.
    The Committee divided: Ayes 108, Noes 152.

    Division No. 62.]

    AYES

    [12.6 a.m.

    Allason, James (Hemel Hempstead)

    Boyd-Carpenter, Rt. Hn. John

    Clegg, Walter

    Astor, John

    Boyle, Rt. Hn. Sir Edward

    Cooke, Robert

    Baker, W. H. K.

    Brown, Sir Edward (Bath)

    Davidson, James (Aberdeenshire, W.)

    Batsford, Brian

    Bruce-Gardyne, J.

    Deedes, Rt. Hn. W. F. (Ashford)

    Bessell, Peter

    Campbell, Gordon

    Dodds-Parker, Douglas

    Biffen, John

    Carlisle, Mark

    Eden, Sir John

    Biggs-Davison, John

    Channon, H. P. C.

    Fortescue, Tim

    Black, Sir Cyril

    Chichester-Clark, R.

    Foster, Sir John

    Blaker, Peter

    Clark, Henry

    Gibson-Watt, David

    Glover, Sir Douglas

    Kitson, Timothy

    Pounder, Rafton

    Goodhart, Philip

    Knight, Mrs. Jill

    Price, David (Eastleigh)

    Goodhew, Victor

    Langford-Holt, Sir John

    Ramsden, Rt. Hn. James

    Cower, Raymond

    Longden, Gilbert

    Rees-Davies, W. R.

    Grant-Ferris, R.

    Loveys, W. H.

    Ronton, Rt. Hn. Sir David

    Grieve, Percy

    Lubbock, Eric

    Ridley, Hn. Nicholas

    Griffiths, Eldon (Bury St. Edmunds)

    MacArthur, Ian

    Roots, William

    Grimond, Rt. Hn. J.

    Mackenzie, Alasdair (Ross&Crom'ty)

    St. John-Stevas, Norman

    Hamilton, Marquess of (Fermanagh)

    Maclean, Sir Fitzroy

    Scott, Nicholas

    Harvey, Sir Arthur Vere

    Macleod, Rt. Hn. Iain

    Sharples, Richard

    Hastings, Stephen

    McMaster, Stanley

    Smith, John

    Hawkins, Paul

    Marsh. Rt. Hn. Richard

    Steel, David (Roxburgh)

    Heald, Rt. Hn. Sir Lionel

    Maude, Angus

    Taylor, Sir Charles (Eastbourne)

    Higgins, Terence L.

    Maxwell-Hyslop, R. J.

    Thatcher, Mrs. Margaret

    Hiley, Joseph

    Mills, Peter (Torrington)

    Thorpe, Jeremy

    Hirst, Geoffrey

    Miscampbell, Norman

    Turton, Rt. Hn. R. H.

    Hogg, Rt. Hn. Quintin

    Mitchell, David (Basingstoke)

    Wainwright, Richard (Colne Valley)

    Holland, Philip

    More, jasper

    Walker, Peter (Worcester)

    Hooson, Emlyn

    Munro-Lucas-Tooth, Sir Hugh

    Walker-Smith, Rt. Hn. Sir Derek

    Hordern, Peter

    Murton, Oscar

    Ward, Dame Irene

    Howell, David (Guildford)

    Nott, John

    Weatherill, Bernard

    Hunt, John

    Onslow, Cranley

    Webster, David

    Iremonger, T. L.

    Orr-Ewing, Sir Ian

    Whitelaw, William

    Jenkin, Patrick (Woodford)

    Page, Graham (Crosby)

    Winstanley, Dr. M. P.

    Jopling, Michael

    Pardoe, J.

    Younger, Hn. George

    Kimball, Marcus

    Peel, John

    King, Evelyn (Dorset, S.)

    Percival, Ian

    TELLERS FOR THE AYES:

    Kirk, Peter

    Pink, R. Bonner

    Mr. Pym and Mr. Grant.

    NOES

    Allaun, Frank (Salford, E.)

    Ford, Ben

    Moyle, Roland

    Allen, Scholefield

    Fraser, John (Norwood)

    Mulley, Rt. Hn. Frederick

    Archer, Peter

    Gardner, A. J.

    Oakes, Gordon

    Armstrong, Ernest

    Gordon Walker, Rt. Hn. P. C.

    Ogden, Eric

    Atkinson, Norman (Tottenham)

    Gregory, Arnold

    O'Malley, Brian

    Bagier, Gordon A. T.

    Grey, Charles (Durham)

    Orme, Stanley

    Barnes, Michael

    Griffiths, David (Rother Valley)

    Owen, Dr. David (Plymouth, S'tn)

    Benn, Rt. Hn. Anthony Wedgwood

    Griffiths, Will (Exchange)

    Paget, R. T.

    Bennett, James (G'gow, Bridgeton)

    Hamilton, James (Bothwell)

    Parker, John (Dagenham)

    Binns, John

    Hamilton, William (Fife, W.)

    Pentland, Norman

    Bishop, E. S.

    Hannan, William

    Perry, Ernest G. (Battersea, S.)

    Blackburn, F.

    Hattersley, Roy

    Perry, George H. (Nottingham, S.)

    Boardman, H.

    Hazell, Bert

    Prentice, Rt. Hn. R. E.

    Booth, Albert

    Heffer, Eric S.

    Price, Christopher (Perry Barr)

    Braddock, Mrs. E. M.

    Henig, Stanley

    Redhead, Edward

    Bray, Dr. Jeremy

    Hooley, Frank

    Reynolds, G. W.

    Brooks, Edwin

    Houghton, Rt. Hn. Douglas

    Richard, Ivor

    Brown, Rt. Hn. George (Belper)

    Hoy, James

    Roberts, Albert (Normanton)

    Brown, Hugh D. (G'gow, Provan)

    Hughes, Emrys (Ayrshire, S.)

    Robertson, John (Paisley)

    Brown, Bob(N'c'tle-upon-Tyne, W)

    Hunter, Adam

    Robinson, Rt.Hn.Kenneth(St.P'c'as)

    Brown, R. W. (Shoreditch & F'bury)

    Hynd, John

    Robinson, W. O. J. (Walth'stow, E.)

    Callaghan, Rt. Hn. James

    Jay, Rt. Hn. Douglas

    Roebuck, Roy

    Carmichael, Neil

    Jenkins, Hugh (Putney)

    Rogers, George

    Coe, Denis

    Johnson, James (K'ston-on-Hull, W.)

    Rose, Paul

    Coleman, Donald

    Jones, Dan (Burnley)

    Shaw, Arnold (Ilford, S.)

    Conlan, Bernard

    Jones,Rt.Hn.Sir Elwyn(W.Ham,S.)

    Shore, Peter (Stepney)

    Corbet, Mrs. Freda

    Jones, J. Idwal (Wrexham)

    Short, Rt. Hn.Edward (N'c'tle-u-Tyne)

    Craddock, George (Bradford, S.)

    Judd, Frank

    Silkin, John (Deptford)

    Crawshaw, Richard

    Kelley, Richard

    Silkin, S. C. (Dulwich)

    Cullen, Mrs. Alice

    Kenyon, Clifford

    Silverman, Julius (Aston)

    Dalyell, Tarn

    Lestor, Mist Joan

    Slater, Joseph

    Davidson, Arthur (Accrington)

    Lever, Harold (Cheetham)

    Small, William

    Davies, Dr. Ernest (Stretford)

    Lever, L. M. (Ardwick)

    Summerskill, Hn. Dr. Shirley

    Davies, G. Elfed (Rhondda, E.)

    Lewis, Ron (Carlisle)

    Taverne, Dick

    Davies, Ifor (Gower)

    Lomas, Kenneth

    Tinn, James

    Loughlin, Charles

    Urwin, T. W.

    Davies, Robert (Cambridge)

    Luard, Evan

    Walden, Brian (All Saints)

    Dell, Edmund

    Lyon, Alexander W. (York)

    Walker, Harold (Doncaster)

    Dempsey, James

    MacDermot, Niall

    Watkins, David (Consett)

    Dewar, Donald

    Macdonald, A. H.

    Wellbeloved, James

    Diamond, Rt. Hn. John

    McGuire, Michael

    Wells, William (Walsall, N.)

    Dickens, James

    McKay, Mrs. Margaret

    Whitaker, Ben

    Doig, Peter

    Mackenzie, Cregor (Rutherglen)

    White, Mrs. Eirene

    Dunnett, Jack

    Mackle, John

    Whitlock, William

    Dunwoody, Mrs. Gwyneth (Exeter)

    Maclennan, Robert

    Williams, Clifford (Abertillery)

    Dunwoody, Dr. John (F'th & C'b'e)

    McNamara, J. Kevin

    Wilson, William (Coventry, S.)

    Eadie, Alex

    Manuel, Archie

    Winnick, David

    Edelman, Maurice

    Mapp, Charles

    Winterbottom, R. E.

    Faulds, Andrew

    Mendelson, J. J.

    Woof, Robert

    Fernyhough, E.

    Molloy, William

    Finch, Harold

    Molloy, William

    Finch, Harold

    Moonman, Eric

    TELLERS FOR THE NOES:

    Foley, Maurice

    Morris, Charles R. (Openshaw)

    Mr. Pym and Mr. Grant.

    12.15 a.m.
    Mr. Iain Macleod: I beg to move,
    That the Chairman do report Progress and ask leave to sit again.
    So far as the events of the last 20 minutes are concerned I would only make two observations. The first is that it is not proper to criticise the conduct of the Chair except by formal Motion, but if the Opposition feel that their rights are being abused we will not hesitate to put such a Motion on the Order Paper.
    But it is perfectly proper to criticise the conduct of the Government in their handling of the Bill, and the traditional way of doing this is to move the Motion which is now before the Committee. We have had three discussions. On the last one no reply was permitted by the Chief Whip from the Opposition Front Bench. Many hon. Members were on their feet to speak. In those circumstances, I think it was grotesque of the Whips to attempt to closure such a debate.
    I come now immediately to the Motion I have put before the Committee, and to ask the Chancellor to reply to this. The next Amendment, one on development areas, is clearly going to occupy the Committee for a very long time, and all the longer in view of the shabby nature of the answers we have been given from the Treasury Bench. It is after midnight. We have disposed of three Amendments. I would suggest to the Chancellor that, if he wants progress on this Bill, we should take an important issue like the development areas at the beginning of a day's sitting, and that therefore we should now accept this Motion and adjourn the Committee.
    Sir D. Glover: We have in the last 20 minutes gone through some of the most disgraceful scenes I have ever seen in this Chamber, scenes largely brought about by the disgraceful behaviour of the First Secretary of State, and I submit to the Committee that we are not in the mood to consider the important Amendments which we have on the Paper. When anger takes the place of reason it is hurtful to debate, and the anger on this side of the Committee is real. I am white hot, and particularly with the right hon. Gentleman. I have never seen more disgraceful behaviour from a Cabinet Minister in the whole of the years I have been a Member of the Committee.
    Mr. Harold Lever Mr. Harold Lever (Manchester Cheetham) rose——
    Sir D. Glover: No. I will not give way.
    The Closure which, in my opinion, you mistakenly accepted, Sir Eric, though I am not criticising the Chair, was largely brought about because the right hon. Gentleman suggested to the Deputy Chief Whip, "Put the Closure". The Committee has been treated to the most outrageous discourtesy. [HON. MEMBERS: "Nonsense."] It is no use hon. Gentlemen opposite saying "Nonsense". Most of them were not here. They have shown such a great deal of interest in the problems of the old—[HON. MEMBERS: "Oh."]—of the under-privileged—[HON. MEMBERS: "Oh."]—that they have been sitting outside the Chamber and have not heard a word of the debate which has been going on. I can assure hon. Members opposite that if they had heard the debate which went on tonight——
    Mr. Ridley: On a point of order. Is it in order for the hon. Member for Glasgow, Govan (Mr. Rankin) to smoke at this stage of our proceedings?
    Sir D. Glover: To what?
    The Chairman: The hon. Member for Glasgow, Govan (Mr. Rankin) knows perfectly well that smoking is not in order in the Chamber.
    Mr. John Rankin: Further to that point of order, Sir Eric. I was not smoking. I was merely holding the pipe of peace in my mouth. Is that out of order?
    The Chairman: I think that it is undesirable that hon. Members should hold pipes in the Chamber.
    Mr. Hirst: Further to that point of order, Sir Eric. It may be that the hon. Member for Glasgow, Govan (Mr. Rankin) is suggesting that his Dunhill, or whatever he calls it, is a dummy, but I should like to assure you that I can smell it from here.
    Sir D. Glover: Having got rid of the Red Indian atmosphere, perhaps the hon. Member for Govan will keep his pipe of peace out of sight, because I am not prepared to smoke it for a very long time.

    1413
    As I was saying before I was interrupted, if hon. Members opposite had been in the Chamber listening to the debate and had heard what had gone on, most of them would have been taking part in this censure on their own Front Bench.
    There were as many speeches and interjections from that side. The hon. Member for Sheffield, Brightside (Mr. Winterbottom) was listening with great interest. My hon. Friend the Member for the Isle of Thanet (Mr. Rees-Davies) and he had formed a coalition on what they thought ought to be done. We were having a really constructive debate, the only weakness in which was the reply by the Financial Secretary. For the debate to have gone on the time that it did without a reply from the Opposition Front Bench is something which, as far as I am aware, is without precedent in our debates on the Finance Bill.
    How can the Government know, on an Amendment which was not an official Amendment but which was brilliantly moved by my hon. and learned Friend the Member for Buckinghamshire, South (Mr. Ronald Bell)—[Interruption.] All right. Hon. Members opposite can go on interrupting. I can go on all night, if necessary.
    How can the Committee know what was the view of the Official Opposition to my hon. and learned Friend's Amendment. Were we going to support it officially? Were the Official Opposition going to say, "We have had a very interesting debate"—[Interruption.] I can see that the right hon. Gentleman the First Secretary wishes to intervene from a sitting position. He also knows that it is out of order. But if he says that I would not have known which Lobby to go into, it is significant that the right hon. Gentleman led all his hon. Friends into the wrong Lobby. The right hon. Gentleman wants to get up a lot earlier in the morning or stay up a lot later at night if he is going to catch me on that simple procedural point.
    We are now here, after midnight, with the Committee obviously not in the mood to debate important matters affecting the people—[Interruption.] Hon. Members opposite say that they are. Of course they are. They will immediately go out and disappear. They are Lobby fodder.
    1414
    Under those conditions, anyone who is prepared to continue with the business of the Committee—[Interruption]—I am talking about those hon. Members who are sufficiently concerned with the interests of the people of the country and their constituents—the old people, the disabled, the under-privileged—to stay in the Committee and debate the problem—it is obvious from the way in which these suggestions are being greeted that the Committee is not prepared to debate these matters in the mood that the people about whom we are talking have every right to expect the Committee to adopt when dealing with these problems.
    We are not expected to deal with regional problems in the mood that the Committee is in at the moment. There is not an hon. Gentleman opposite who is not at this moment full of levity. There is not an hon. Member on this side of the Committee who is not full of rage. Under these conditions, this is not the mood in which this Committee should go on debating the important Amendments that we have before us on the Notice Paper.
    My criticism, and I am sure that it is shared by most of my hon. Friends, and certainly by my hon. Friend the Member for Bournemouth, West (Sir J. Eden), is that during the last debate when we were debating the problems of the old, those on limited incomes—[Interruption.]—if right hon. and hon. Gentlemen opposite wish to break the rules of order by making remarks from a sitting position, I do not mind, but perhaps it might be as well, Sir Eric, if you called them to order before this becomes too much of a circus on the other side of the Committee. The right hon. Member for Belper (Mr. George Brown) has made as long a speech from a sedentary position as I have made while on my feet and within the rules of order. I think that it is time the Chair drew the right hon. Gentleman's attention to the fact that he should not make a speech while sitting down.
    I find it rather difficult to address the Chair when, in my left ear, while I am trying to do so, there is this rather asinine voice of the right hon. Member for Belper muttering from his comatose position on the Front Bench. Being the cause of most of the bother, I should

    1415
    have thought that by this time he would have realised that as long as——
    Mr. David Webster: I am trying to follow what my hon. Friend is saying. I heard him say something about his left ear. It is very tantalising. Can he tell me what other words he employed?
    Sir D. Glover: I do not think that I will reply to that intervention, because I want to come to the reason why we on this side of the Committee object to the Closure being moved in the way that it was.
    We had been debating, I should have thought in a most constructive and friendly atmosphere, a very important Amendment which disclosed—and there is no argument about this—that there are an enormous number of anomalies in the Bill, anomalies which meant that great hardship would be created for an enormous number of people who, because they are unorganised, are unable to provide the sort of Lobby that is provided by the Co-operative movement, by the trade union movement, or by anybody else.
    We had not had a reply to the argument, and what I should like to make clear to the Committee is that what happened from the other side tonight made it clear that it will stick in their gullets for all eternity if anybody on the benches opposite has the hypocrisy to say that they are the people who protect the under-privileged.
    12.30 a.m.
    They were not in the Committee. They were not interested. They did not know what we were discussing but they thought that it was a good thing to move the Closure. What were we discussing? We were discussing the problems of a person of 80 years of age with somebody looking after him, who is working on a very narrow budget, probably not even saving 2s. a week out of his weekly income. Now he is being asked for a contribution of 12s. 6d. or 25s. a week for five months before he gets any of it back.
    These are problems which we have to face and which should be faced and problems which should be amended by this Bill or, at least, there should be a promise that other arrangements will be made, or
    1416
    that the Ministry of National Insurance should take care of the problems which we have been putting to the Chancellor tonight.
    But what has happened as a result of all these arguments? The Financial Secretary got up and told us that nearly everything that we had said was unimportant. He implied that there were none of these cases and said that administratively the Amendment was not workable. My hon. Friend did not ask for that. He asked that the Chancellor and the Treasury should realise that these were real problems and that they would bring in proposals to overcome most of them. Not one word did the Committee get to persuade them to allow this Amendment to be withdrawn.
    We had been debating a most important Amendment and then, when we got to that Amendment being, as it were, clarified by both Front Benches, what happened at that crucial moment? The First Secretary came into the Chamber, not having listened to the debate—and I should hate to think what the Chancellor will say to him when they get outside—and completely ruined the atmosphere which existed. There was no sense in any part of the Committee of filibustering. The debate was going on at a very serious level and everybody was waiting to hear the final speeches. There were about two more hon. Members on this side wanting to speak and then there was the hon. Member who was to have wound up from our Front Bench.
    That would have been the end of the debate in friendship and animity and the Chancellor knows this. Perhaps we would have divided on the Amendment, and then we would have proceeded to the next Amendment with the Committee in the right mood to proceed. But, because of his wretched stupidity, the First Secretary has ruined the whole atmosphere and, whatever happens, I am sure that neither side of the Committee is in the mood to go on debating important matters affecting hundreds of thousands or millions—[Interruption.]—of people whom we represent in this Committee.
    It was and is our duty to debate these problems affecting this vast number of the electorate in a mood that the electorate would expect us to be in when we are debating matters of this kind. I

    1417
    support my right hon. Friend's proposal, because I do not think that either you, Sir Eric, or anyone in the Chair or even the Chancellor, can get the Committee back to the right mood for debating these problems.
    Mr. Boyd-Carpenter: I think that it was a little odd that the Chancellor did not rise to reply after my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) had moved this Motion. The Chancellor knows as well as anyone in the Committee that it is the normal, polite thing on these occasions, when a Motion of this kind is moved from the Opposition Front Bench, for the Minister in charge of the Bill to reply. There is a practical reason: it enables the Minister to indicate the Government's intentions fairly and openly, it very often saves a great deal of time and it is a normal courtesy to the Committee.
    This is typical of the mishandling of the debate this afternoon by the Chancellor. That is one of the major reasons why I support my right hon. Friend's proposal that we should at this stage report Progress. One must admit that the Chancellor has had a very bad day. He began with an admission that he had tried to take some politically embarrassing words out of HANSARD, and that was followed by a pitiful attempt to reply to the first Amendment when he did not deal with the main proposals put forward, and it has culminated, as my right hon. Friend said, in the grave misjudgment, to put it no worse, of the employment of the Closure on the last Amendment at the moment that one of my hon. Friends on the Front Bench was on his feet—as were a number of my hon. Friends on the back benches—thus showing pointed discourtesy to the Opposition.
    I have had a little experience of handling Finance Bills, and I say to the Chancellor that this is not the way to make progress. If one tries to treat the Committee and the Opposition in it with pointed discourtesy, with a refusal to answer arguments, with a reliance on the Closure rather than a proper wind-up of the debate, and with a refusal even to rise in the normal way to follow the Opposition spokesman on this Motion, one cannot grumble if one does not get co-operation and help from the Committee.
    1418
    That is the first reason for suggesting that we should adjourn. The Chancellor and the Government have had a bad day. They have mishandled the debate and they have put the Committee in a difficult mood in which progress on a serious matter will be extremely difficult. Secondly, this is not the hour of the night to proceed with these Amendments. I know that we have often gone through the night on Finance Bills, but there must be a certain judgment in the selection of the issues to be debated through the night. Part of the Chancellor's mishandling of this matter which I do not think he has even yet grasped is that this Clause and the Amendments to it deal with matters about which my hon. Friends care enormously and about which people outside care even more. These are the major controversial measures of his Bill, and people outside will not understand if, simply to suit the Government's time-table or because of the mishandling of the matter by the Government, we are driven to debate them until 2 a.m., 3 a.m., 4 a.m., 5 a.m. or 6 a.m. The Chancellor must recognise that people outside will resent this treatment of these parts of the Bill.
    I assume from his silence that the Chancellor will not accept the Motion, because obviously he would have saved time by rising to accept it. I do not know what he thinks he is doing. Does he think that at this stage of the Bill, driving on from Closure to Closure, he will get the Clause at this Sitting? The only possible explanation of such a theory is that he is trying to kill this afternoon's Sitting in order to avoid the Prime Minister's revelations about the National Union of Seamen. That is about the only logical justification for the right hon. Gentleman's conduct of the matter. His conduct has been so lacking in logic that I doubt whether that—the one sensible conclusion—is the real one to draw.
    The Chancellor has had considerable co-operation from my hon. Friends on the Bill. He does not dispute that. He has had a good atmosphere in the Committee. Does it make sense to sacrifice this, just because things have gone wrong, as they go wrong on Finance Bills from time to time?
    Mr. Archie Manuel: The right hon. Gentleman should know.
    Mr. Boyd-Carpenter: I have had the sense to obey the good military maxim, "Do not reinforce failure". Does it make sense, something having gone wrong or in a fit of pique—or even because the First Secretary has recovered sufficiently from tiredness to come in and intervene—to spoil that atmosphere; to attempt what the right hon. Gentleman knows he cannot do, and get the Clause at this sitting? Would it not be better to make a virtue of necessity and say that he recognises that my hon. Friends, and I think many hon. Gentlemen opposite, care a great deal about the next Amendments and the Clause and want them discussed fairly and properly and at the right time of the day when the Committee is in the right mood and when the matter can be properly discussed so that—and I do not want to commit my hon. Friends—we can then make the sort of progress the right hon. Gentleman wants? This is really a testing moment for the right hon. Gentleman—of his judgment and of his command of the Committee. I hope that he will, by accepting the Motion, show that he passes the test.
    Mr, Callaghan: The right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) has stood at the Dispatch Box dealing with Finance Bills on many occasions. He has drawn on his experience tonight to tell us of some of the phases through which the Committee has gone, in his experience and in mine. I would have responded immediately to the request of the right hon. Gentleman if we had been in the situation in which we are normally; in which an hon. Member makes his request and then the Minister rises to answer.
    But it seemed that there were a great many other hon. Members anxious to speak at that time—and, maybe, are still anxious to press their views on us—and I thought, therefore, that it would be courteous on my part to hear all the reasons they might wish to advance why we should report progress now, because I would not want to be accused of pre-empting their arguments, of anticipating them or of not bothering to listen to them before replying. I am sure the Committee agrees that it was proper for me to wait, and as the right hon. Gentleman has said that now is
    1420
    the moment for me to rise to reply, I will do so.
    The right hon. Member for Kingston-upon-Thames asked what I thought about the progress of the Committee in future, as did the right hon. Member for Enfield, West (Mr. Iain Macleod) to whom I am specifically replying now. Even making allowances, because this is an important Bill, I think that our progress has not been over-speedy. We have been deliberate and mature in our consideration. We have had a very ripe discussion of all the facets of the Amendments before us, and no one can say that that is not the function of the Committee. However, I would not accuse the Committee of being over-speedy today and, therefore, I feel that, having taken part, as have hon. and right hon. Members in all parts of the Committee, in the very serious debates we have had, I do not accept the commonly held view outside that it is not possible to debate these matters because it is one o'clock in the morning.
    In the course of our deliberations on the Finance Bill I have heard some very serious debates indeed on matters of very great importance, and as we have a great deal of work to do, I propose that the Committee should continue for the time being on this important subject of regional differentiation. We will then have to follow it with another very important Amendment, No. 34, and with it will be taken a number of others. There are, then, Amendments dealing with hotels, small employers who have employees abroad—that is a Liberal Amendment—the Industrial Training Board, the right of appeal to courts and the position of Northern Ireland. It seems to be rather a heavy night's work to get through all that.
    Mr. Hirst: It sounds like next week's business.
    12.45 a.m.
    Mr. Callaghan: I would not suggest that we could get through the whole load tonight, but I believe that substantial progress could stall be made. It will be generally agreed that the arguments on this Clause can be readily deployed. Some very succinct speeches have been made. They have been none the less forceful for that reason. Having given some indication that I should

    1421
    like to make some substantial progress on the major Amendments which lie ahead, we could probably then, I hope with the consent of the Committee, call it a day—or a night, whatever the appropriate terminology—and retire to our beds.
    I hope therefore, in the light of that that the right hon. Gentleman will be willing to withdraw his Motion and that we can proceed with discussion of the Bill. [HON. MEMBERS: "No."] Hon. Members say "No". That was one reason why I did not rise earlier, because I feared that that would be the response, but I have given the reply I have been asked for by the right hon. Gentleman the Member for Enfield, West and the right hon. Member for Kingston-upon-Thames. That would be my view of the sort of progress we should try to make through the rest of the night.
    Mr. Peyton: The Chancellor has given the Committee a reply that was at least courteous in tone, but he has given us nothing in substance. Nor has he given any acknowledgment of the reasons for the dismay, the discontent and anger felt on this side of the Committee that the previous Amendment, which had been very reasonably discussed without a trace of filibustering, should have been closured in that fashion.
    It would be wrong for me, Sir Eric, to make any comment on the fact that you accepted the Closure, but I object to the appearances on such occasions of what the other day I called the "vet." with his humane killer to put this wretched Government out of their misery without any attempt to see what the debate is about, the mood of the Committee, whether points are being well made or not, or whether there has been tedious repetition or not. He does not do that but comes in and moves the Closure without apparently ascertaining whether a Front Bench speaker from this side of the Committee has addressed the Committee. I find that extraordinary.
    The Motion we are discussing is the oddly phrased one that you should report Progress and ask leave to sit again. This Motion is always moved by those who are conscious of the fact that they have
    1422
    made no progress at all and it is listened to by those who hope never to have to sit again in dealing with the Measure before them. Never were those words more true than on this occasion. We have made virtually no progress with a horrible Measure and none of us on this side of the Committee wants to discuss this dreadful thing again.
    I am absolutely convinced that the merits of the argument on the Amendment we discussed this afternoon were never weighed by the Chancellor or any Government spokesman. We wanted to give the Government an opportunity to consider again the growing voice of protest coming from the country—not only from these benches—about a tax which is manifestly unjust, manifestly ill-thought-out and which in its implementation will be the source of a great deal of trouble. I would not wish to echo some of the remarks that have been made by some of my hon. Friends, doubtless in moments of exasperation, about some of the replies that we have been given. I think the Financial Secretary has always been courteous in his answers. I am very sorry that the burden that has been put upon him has involved a complete bankruptcy in his answers. He has done it with great civility and courtesy, but the instructions that he has been given have been such that he could not afford the Committee any satisfaction at all. If one were feeling in an intemperate mood, one would state that future replies in these debates upon this wretched tax might well come from the Government Front Bench in Hungarian because they could not mean less to us in that or in any other language that we did not understand.
    Many of us have been here a long time and have sat through many Finance Bills. We all accept what the Chancellor said, that it is quite normal to sit into the early hours of the morning, and in fact well into daylight, discussing these things. But here we have a wholly new tax. This is a new matter, and I do not believe it is right that the Chancellor should ask the Committee to sit through the night debating a tax which all the evidence goes to show is ill-thought-out and thoroughly unright.
    I hope the right hon. Gentleman will have second thoughts before he imposes

    1423
    his will upon us. Of course, the Government can use their majority to force the Committee to go on, but you, Sir Eric, are just as familiar as I am with the fact that the view which has been facing this side of the Committee during all the previous hours of this sitting has been like a bare, grassy bank, unoccupied benches resembling a green unrelieved by even a weed growing here and there, not even a dandelion——
    Mr. Emlyn Hooson: Will the hon. Gentleman give way?
    Mr. Peyton: No. [Interruption.] The right hon. Member for Belper (Mr. George Brown) has suddenly come to, with a passionate desire to attack me for not giving way to a member of the Liberal Party. I was about to say something to the right hon. Member for Belper, and I will not be interrupted at the moment. I wish to complete my sentence.
    I was engaged in a botanical survey of what the faces opposite look like. I do not exactly wish to disgrace the whole dandelion class by a reference to the right hon. Member for Belper. Having said that, I will be glad to give way.
    Mr. Hooson: I am obliged to the hon. Gentleman. If he and his party are so concerned about the Selective Employment Tax, can he explain the fact that in the hours of daylight during the Second Reading debate of the Bill, for a good deal of the time there were only three Conservative Members in the House?
    Mr. Peyton: Here, once again, we have evidence of the passionate desire of the Liberal Party to help the Government out of their embarrassment. I am extraordinarily grateful to the hon. and learned Member for reminding me of this gross omission of which I was very nearly guilty. I am very much obliged to the hon. and learned Gentleman who has reminded me that I should pay tribute, on behalf of the Government, to the way in which the Liberal Party is anxious to help the Government on every possible occasion. It does seem to me——
    Mr. Lubbock Mr. Lubbock rose——
    The Chairman: Order. The hon. Gentleman must resume his seat unless the hon. Member gives way.
    Mr. Manuel: On a point of Order, Sir Eric. I would ask you to give some consideration as to whether the inanities of the hon. Gentleman in dealing with the botanical survey, as he called it, and the Liberal Party are in order of this Motion.
    The Chairman: I have not yet heard anything that is out of order.
    Mr. Manuel: Botanical surveys in order? Shocking.
    Hon. Members: Oh.
    The Chairman: Order. The hon. Member must not say that. Botanical references in support of an argument are in order.
    Hon. Members: Withdraw.
    Mr. Bessell: On a point of order. Is it in order for an hon. Member to discuss on this particular Motion the conduct of the Parliamentary Liberal Party in relation to the Government? What possible connection does this have with the Motion proposed by the right hon. Member for Enfield, West (Mr. Iain Macleod)?
    The Chairman: It is quite clear. The Motion that I do report Progress and ask leave to sit again admits of a very wide debate.
    Sir Arthur Vere Harvey: On a point of order, Sir Eric. When you gave your Ruling a few minutes ago I distinctly heard the hon. Member for Central Ayrshire (Mr. Manuel) say to you "Shocking." Should he not withdraw that remark?
    The Chairman: I called the hon. Member for Central Ayrshire to order because of the expression he used. I understand that he withdraws it. Is that right?
    Sir A. V. Harvey: The hon. Member has not withdrawn it so far as this side of the Committee could observe. Surely he should withdraw it?
    Mr. Harold Lever: I must confess that I, too, heard the word "shocking", but I understood it to refer to the speech of the hon. Member for Yeovil (Mr. Peyton) and not to your Ruling, Sir Eric.
    Hon. Members: No. Withdraw.
    Mr. Ridley: On a point of order, Sir Eric. Is the hon. Member for Central

    1425
    Ayrshire not going to comply with your request? I distinctly heard you ask him to withdraw the word "Shocking."
    The Chairman: I am sure the hon. Member for Central Ayrshire wants to clear this matter up. If he was applying the word to something said by an hon. Gentleman opposite it would not be out of order. If he was applying the word to the Ruling of the Chair, it would be out of order.
    Mr. Manuel: Sir Eric, I was surprised by your Ruling that botanical surveys—[HON. MEMBERS: "Oh."] Shut up, you dumb heads.
    The Chairman: Order. The hon. Member really must not say that. If the hon. Member is in the process of withdrawing an earlier observation, will he please continue?
    1.0 a.m.
    Mr. Manuel: I was explaining, Sir Eric, that I did express annoyance at your Ruling. I regret that, and I unreservedly withdraw it.
    Sir D. Glover: On a point of order, Sir Eric. The hon. Gentleman has now withdrawn the expression, but I had not thought there was anything unparliamentary in the word "dumb" or in the word "head". [HON. MEMBERS: "Wrong again".] Quite honestly, Sir Eric, I do not think there is anything very unparliamentary in the word "shocking" either. It is only what one would expect from the hon. Member for Central Ayrshire (Mr. Manuel), but I do not think there is anything very unparliamentary in it.
    Mr. Peyton: I can well imagine that there are times—it would never occur to me—when an hon. Member might wish to delay the proceedings by making an unnecessarily long speech. Had that been my desire and aim now, I could not have been more liberally or more generously helped. I have had help from the Liberal Party and from the hon. Member for South Ayrshire——
    Mr. Manuel: Central Ayrshire.
    Mr. Peyton: Central Ayrshire—I apologise to the hon. Member for South Ayrshire (Mr. Emrys Hughes). We have had quite a number of interruptions of that sort from the hon. Gentleman. They
    1426
    have recently received some public notice. I leave the hon. Gentleman with the comment that I know of no better judge of inanities than he.
    We on this side regard this new tax as hastily contrived, ill judged and bad. We consider it wholly wrong that the Committee should now be asked to sit into the morning discussing measures specifically connected with development areas. These matters deserve the attention of all hon. Members who sit for constituencies in development areas. I wonder how many will be here to contribute. I do not represent a development area, but I am certain that all those who do will wish to give their views, which, presumably, must be hostile to the Government, no matter on which side they sit, even if it should inconvenience the First Secretary of State. The right hon. Gentleman is easily upset, we know, but there must be more important considerations to be borne in mind than his inconvenience.
    One of my earliest recollections in the House of Commons is of when the right hon. Gentleman was No. 2 to Lord Williams, then the Opposition spokesman on agriculture. Pages of HANSARD were regularly punctuated by sedentary interruptions from the right hon. Gentleman. Power and office have not altered his habits. He is just as noisy as he ever was. But, of course, if he goes on like this, he provokes even the most mild mannered people, like myself, into conduct which otherwise one would, perhaps, be tempted to regard as excessive. [Interruption.] But the right hon. Gentleman still gabbles on. Nobody can turn that tap off.
    I am sure you sympathise with me, Sir Eric, as much as anyone here. It is terribly difficult to sit down because, everytime I come to the end of my remarks, there is an interruption from the other side which even I feel obliged to deal with. So here I am, Sir Eric, still on my feet.
    I conclude my remarks to the Committee and to the Chancellor with the following. I hope very much that this euphemistically phrased Motion, to which we are all so accustomed, will not fall on deaf ears. I hope that in the interests of the progress which the Chancellor must wish to make with the Bill he will have second

    1427
    thoughts and accept my right hon. Friend's Motion.
    Mr. Harold Lever: It is with some diffidence, but not without hope, that I rise to make a brief speech to appeal to the better and more reasonable sense of the Opposition. The diffidence is due to the fact that I, unfortunately, and to the undying gratitude of the Chancellor, was not able to be present during the earlier debates this evening. I was studying other aspects of the Finance Bill outside the Chamber, as is common. [Interruption.]
    It is a false point that some of my hon. Friends were not here either. One must accept the principle that hon. Members may reasonably be outside the Chamber engaged in other tasks, correspondence and study, devoting themselves to their duties in their own way and by their own choice. If one accepts that any hon. Member may be out of the Chamber devoting himself to his duties, one must inevitably accept the fact that great numbers of hon. Members may at any particular time be out of the Chamber. I hope that the Opposition will not feel incensed by the absence of a politically biased audience to hear their many cogent arguments, which will be studied, I am sure, with great care in tomorrow's HANSARD.
    I rose to appeal to the better sense of the Committee and, in particular, to the better sense of the Opposition. We are engaged upon a long, complex Bill. Nobody would challenge that the Opposition have made many useful and cogent contributions to our discussion. We do not want them to blunt the fine edge of their reasoning by interminable debating as to whether we should sit again or continue our debate. The Chancellor has spoken. The Chancellor, with words of sweet reasonableness, has indicated to the Committee that he would like a little more progress tonight.
    I wonder whether I do not strike an answering echo in many hearts on the other side of the Committee when I suggest that it is not to our advantage that in proving our devotion to the study and argument of the Bill we undermine each other's health annually at this time of the year. It seems to me on the whole that we shall emerge with greater credit if we continue our discussions of the Bill in the same spirit of reasonableness.
    1428
    I was not present during the earlier discussions on this Bill, as I have admitted, and I hope that the Committee will forgive me for that, but from previous experience of these discussions I am sure that every word spoken was germane, cogent and relevant and will be studied by the Chancellor in due course. 1 appeal to the Committee now to abandon the Motion to report Progress and let us make some progress with the proceedings on the Bill.
    Mr. Iain Macleod: I wonder whether the hon. Member realises—he certainly would have done had he attended the earlier debates; I understand why he did not and make no complaint about it—that if the Closure had not been moved the debate would have gone on perhaps for 20 minutes. The fact that an hour and twenty minutes have been lost is entirely due to the stupidity of the Government Chief Whip.
    Mr. Lever: I was not present and 1 am prepared to assume as a hypothesis, however unlikely, that my right hon. Friend was guilty of an error of judgment. But surely the point has been effectively made. Surely we have all taken it. If there was an error of judgment, which I can neither admit nor deny, long experience has taught me that errors of judgment occur from time to time—and not only on this side of the Committee.
    Sir A. V. Harvey: Will the hon. Gentleman cast his mind back to some years ago when he spoke for two hours and 50 minutes on a fishing industry Measure and his shirt came out in the process?
    Mr. Lever: I am not sure that I should be in order if I referred in detail to the speech I made on that occasion.
    Mr. Ridley: Would the hon. Gentleman admit that it was an error of judgment?
    Mr. Lever: I am not prepared to consider that the close and considered scrutiny I gave to all aspects of the White Fish Authority on that occasion was not entirely justified in the circumstances of the debate. You would rebuke me, Sir Eric, if I made a more extended defence of my modest intervention on that occasion.
    What I am seeking now is to say to hon. Members opposite that they have

    1429
    made their point and that I can understand that they may suppose, perhaps wrongly—and I hope they believe that they can possibly be wrong—that my right hon. Friend had the Closure moved too early under a misapprehension or because of some error of judgment. We have taken the point and it would be in the best interests of the Committee and of the Opposition if we were now to proceed not to debate whether we should not debate the Bill but to get on with the Bill and make a little further progress.
    Mr. St. John-Stevas: The hon. Gentleman's argument would be more effective if he included an appeal to the First Secretary of State to make an apology to the Committee for his misjudgment, in which case we would make progress.
    Mr. Lever: I am sure that when the hon. Gentleman comes to reflect upon that intervention—he is a chivalrous person—he will not wish, even if my right hon. Friend has made an error of judgment, to humiliate him in any way. I am sure that is not the object of the Motion. I am sure the Motion proceeds in a normal spirit without any desire to humiliate or injure my right hon. Friend.
    I sincerely urge upon the Committee that, in a sense, we on this side are dependent upon the great power, effectiveness and alertness of the Opposition. We sincerely believe that there should be an Opposition—although perhaps with some reduction in their number, for political considerations. But we believe in the two-party system—[HON. MEMBERS: "There are three parties."]—or the three-party system. We believe that there should be as many parties as the people feel should be represented in the House of Commons—and the fewer the better.
    I hope hon. Members opposite realise that, in a sense, they are tantalising those like myself on this side who are eagerly awaiting their arguments about regional development questions and who believe that there is much that they can contribute to our enlightenment and stimulation. I plead with them not to delay their words of wisdom too long until we are too sleepy to get the benefit from them that we should derive.
    Mr. Jeremy Thorpe: I want to say a word or two as one of the signatories to the Amendment the debate
    1430
    on which is now in balance, as one who represents a constituency which has a development district within it and as one who voted with the Opposition on the basis that there should perhaps have been a longer debate on a matter of great importance.
    1.15 a.m.
    Having said all those things we have had, for the last hour, a sort of exercise in mass psychoanalysis from the Conservative Opposition as to what is the mood of the Committee. Because the Conservative Party, with some justification, is angered that the Closure should have been moved, they all want to go off to bed——
    Hon. Members: Oh, no.
    Mr. Thorpe: Perhaps they want to listen to a few more of the speeches like that of the hon. Member for Ormskirk (Sir D. Glover) and the hon. Member for Yeovil (Mr. Peyton), whose constituency is conspicuously absent from the list of development districts.
    Those speeches, on the eve of the discussion about the seamen's strike, are an excellent example to the nation of productivity at its best; of how we can really get on with business. We can spend a whole hour discussing whether or not we are going to do something or go to bed. No doubt this will make a great impression upon the nation. It will prove a spur to greater productivity throughout British industry and no doubt there will not be a man in the workshops who will not have read of this great debate of the last hour, with the Opposition debating whether they should go to bed because they happen to be angry. The hon. Member for Macclesfield (Sir A. V. Harvey), the Chairman of the 1922 Committee, in an interjection, made what may have been a Freudian slip.
    His only previous contribution, if I heard him right, was to tell an hon. Gentleman opposite not to pick his nose. He will correct me if that was not his intellectual contribution to the proceedings. If I am wrong I will withdraw, but I see that he remains sedentary. No doubt he will continue making these observations.
    It is perfectly true that the First Secretary came down here and constituted himself into a sort of supernumerary Chief

    1431
    Whip. This may well be the answer to the Government's problems. Maybe he will take a vow of silence. As to whether the right hon. Gentleman will obey it or not, we do not know. If the Tory Opposition want to go home, let them go, every one of them. We are concerned about the future of the development districts, and we think that it is more important that this Amendment should be discussed than that an angry Tory Opposition should meet a gag with a filibuster, because that is what it amounts to. [An HON. MEMBER: "What is the hon. Gentleman doing now?"] I would suggest to the Tory Party that they answer this question: are they interested in discussing the future of the development districts and whether there should be some alleviation to them under this monstrous Selective Employment Tax? Is it more important to them to discuss this in Committee than to have a filibuster about whether we go home now, after three hours of filibuster?
    For a change the Tory Party might try to be a little more responsible. After all, this is the party which was born to lead. We should have the logical reaction from them that they are prepared to discuss matters of great importance in preference to filibustering. We have had enough filibustering from the Tory Party and we should now get on and discuss something which, at any rate, those of us on this bench, think is more important than a lot of hot air.
    Mr. Ridley: It was extremely fortunate that the Closure was not moved on this occasion before I was able to catch your eye, Mr. Irving. On the previous occasion this is exactly what happened to me, although I had the honour to seek to close the debate from the Front Bench on this side of the Committee. The Chief Secretary is well aware that this was my intention and he asked me with a grimace whether I intended to speak, to which I nodded. It was then that his right hon. Friend moved the Closure. I rarely have the honour and privilege of winding up on behalf of the Opposition. I feel that some discourtesy has been done to my right hon. and hon. Friends.
    I would answer the hon. Member for Devon, North (Mr. Thorpe) by saying this. It is now 1½ hours since the
    1432
    Closure Motion was moved. By this time we would probably have got the Amendment dealing with development districts and the previous Amendment. We might well be on the way to getting the next Amendment. The mood of the Committee would have been thoroughly happy and favourable. If the hon. Member for Devon, North thinks that the Opposition are behaving in an irresponsible way, perhaps he will reflect that one of the rights of hon. Members is the right of freedom of speech.
    This is a brand new tax, a tax unique in the fiscal history of this country.
    Mr. Lubbock: We are not discussing the tax.
    Mr. Ridley: This is the first time that Amendments on this tax have come before this Committee. For the benefit of the hon. Member for Orpington (Mr. Lubbock), may I remind him that the last Amendment was on the question of exempting employers of one employee or the first employee in any business from the effects of the Selective Employment Tax. This is the first day on which the Committee has debated this tax.
    We have had five days on the Committee stage, and we have covered 41 Clauses. That is co-operation and good progress. The Chancellor of the Exchequer has nothing to complain about in the progress made. It was the intention of my right hon. Friends to make good progress so that there would be more time available to debate the Selective Employment Tax. I have constituents, to whom I wished to refer, who are vitally and perhaps painfully affected by what the Committee decides tonight. I wanted, not only to talk on behalf of my constituents, but to put a point on the collective viewpoint of the Opposition which affects the poor, the elderly, the disabled, the widowers, and people of this sort.
    This was the most tactless of all the debates which the Government could have closured. It shows a basic lack of decency and humanity to choose this subject on which to gag the Opposition. If right hon. and hon. Members opposite sit here through the hours watching the clock go slowly round, and if they get not one more Clause, I hope that they will, when they wake up in the morning

    1433
    with a hangover, realise that it is just as important to afford the Opposition, when they are being reasonable, the opportunity to debate reasonably these crucial issues which concern individuals about whom we happen to care. Then perhaps they will know that it will not pay them to do it again.
    Mr. Stanley Henig: Like my hon. Friend the Member for Manchester, Cheetham (Mr. Harold Lever), I rise with diffidence to address a few words to the Committee. It is the first time that I have had the pleasure of being in the Committee when this important Bill has been discussed—[HON. MEMBERS: "Oh."]—I do not think that I am the only new Member to be in the same position.
    The events of the last 1½ hours leave one feeling more than slightly sad. We have had an exhibition of the great minds of the nation exercising themselves on the nation's affairs—not about whether the Selective Employment Tax is good or bad, not about whether the Finance Bill is good or bad, not about the problems of development districts, which many of us have in our constituencies, but about the earth-shattering subject of whether we should report progress.
    One knows what party politics is all about. One knows that during a debate of this nature it is the Government's job to get through their business and it is the Opposition's job to oppose. One knows that from time to time the Closure Motion will apply and that the Opposition will not like this. After the past 90 minutes of discussion one would suppose, in a reasonable country with reasonable people, that perhaps—just perhaps—the Chancellor of the Exchequer and his opposite number on the Opposition Front Bench would like to get together, perhaps over a glass of whisky or something similar, and decide that the interests of the nation demand that we stop this farce now, decide how many more Amendments the Committee will dispose of tonight and get down to business.
    I can, however, say one thing. Outside the House of Commons the nation is viewing with increasing contempt what goes on here. It views with contempt—[Laughter]—the Opposition can laugh—that we are having an exhibition like
    1434
    this, wasting time instead of discussing the things that really matter.
    There is more at stake than the heat of hon. Members opposite who wanted to speak but could not or of the Government who, perhaps, want to get through an extra Amendment tonight. What is at stake is the prestige of Parliament. I may be a new member of the Committee, but I urge those on the Front Benches, on both sides, who think that they are our betters to remember that, so far, this is a democracy in which we can discuss reasonably and try to get on with the business of the country. If, however, this tomfoolery is to epitomise our Parliament, then it seems to me that Parliament and all of us will be swept away and no one will care less.
    Sir J. Eden: I am sure that the whole Committee welcomes the views of the hon. Member for Lancaster (Mr. Henig). I could not quite make out whether it was his maiden speech in this place. At least, I understand that he feels strongly about the position. I am quite certain that he would wish to emphasise at every possible opportunity also the rights of the Opposition in the House of Commons as much as of those who support the Government of the day.
    I know perfectly well, having been in a similar position myself, how infuriating it is for Government back-benchers to have to sit in a semi-paralytic condition listening to this procedure. It is, however, an essential part of our procedure.
    The hon. Member for Manchester, Cheetham (Mr. Harold Lever) made a charming gamekeeper but, having witnessed him in his somewhat nefarious activities as a poacher on so many occasions in the past, I find his remarks somewhat unconvincing. At least, he put them forward in the best of spirit. He was, of course, at a grave disadvantaage because he had not been present during the earlier part of the Committee's proceedings today. Had he been here, he would by no means have wished to be a party to the rather dusty manoeuvre perpetrated by his right hon. Friend the First Secretary and the deputy-Chief Whip.
    Mr. Harold Lever: I hope that the hon. Member did not misunderstand my remarks as conveying that effect. I was

    1435
    saying that it would be wrong, and probably indefensible, for somebody who was not in the Chamber when the incident occurred to pass an opinion hostile to the opinions expressed on the other side of the Committee. I certainly was not endorsing that opinion. It would have been quite improper for me, not having been present at that particular moment, to have controverted what was said from the other side of the Committee.
    1.30 a.m.
    Sir J. Eden: I fully understand the hon. Gentleman's position, and I know he was doing his best to be helpful. The fact remains, however, that I am convinced that had he been present in the Committee during those proceedings—this is what I said earlier—he would not himself have wished to be a party to the manoeuvre perpetrated by his right hon. Friend the Member for Belper (Mr. George Brown).
    I think it was very significant that the Chancellor of the Exchequer himself did not appear to be a party to that operation. Certainly, he was not present in the Chamber at the time when that happened. The Chancellor, who has already spoken to us on the Motion now before us, clearly realises that he is in a spot. He sought to pour oil on troubled waters, to mollify the Members of the Committee, quite reasonably telling us that we should make progress with his Bill.
    It is, however, a little bit late in the day to start worrying about that. The time when he should first have started worrying about the atmosphere in the Committee and the attitudes of hon. Members on this side was when he replied to the first Amendment we took this afternoon. It was that which started the proceedings off on the wrong foot, because it was in that debate that he made it quite clear that he had scant interest in what was being said from this side of the Committee, when he paid very little regard at all to the series of extremely telling and important points which had been made, admittedly in great variety, from this side of the Committee. I thought then that his intransigent attitude, the utterly inflexible attitude which is becoming typical of him during these proceedings, is typical of the Government of the day.
    1436
    The right hon. Gentleman the Member for Belper is a natural bully—[HON. MEMBERS: "Oh."]—he is a natural bully. He lacks finesse. He likes to enter on the scene in a rumbustious manner. He has a full-fruity voice, and he does not like in any way to be interrupted in what he believes to be the proper way of doing things, and he makes his protest known pretty volubly when he chooses, and pretty vulnerably. I have seen him making such protests from this side of the Chamber——
    The First Secretary of State and Secretary of State for Economic Affairs (Mr. George Brown): And rather better than that.
    Sir J. Eden: —most effectively and most continuously and in a very heated manner over a very long period of time. He will, therefore, I am certain, be among the first to recognise now that he committed an error of judgment in being a party to this particular manoeuvre. The right hon. Gentleman walked into this debate looking angry and upset. He had not bothered to listen to any of the proceedings whatever. He got into consultation with his hon. Friend the Deputy Chief Whip, and together they cooked up this operation.
    What particularly annoyed me was not that the right hon. Gentleman was in any way anxious to get on with the debate or to move the Closure. That did not worry me. This is a weapon in the hands of the Government, and a perfectly legitimate weapon it is, and they can use it at any time they choose, and they will, no doubt, do so again from time to time. But it is a weapon which, if it is to achieve its objective, must be used with some care and restraint. At any rate, before it is used, there must have been some understanding of the atmosphere of the Committee and of the nature of the debate which had been taking place.
    The fact remains that there were still a number of hon. Members rising to their feet wishing to speak on Amendment No. 268. I was one of them, though I make no special point of that. I had a number of points to make which had not previously been raised in the Committee, and I was hoping to have an opportunity of doing so.
    If there are a number of hon. Members who wish to raise points on Amendment

    1437
    after Amendment during the passage of the Bill and during our consideration of this tax, right hon. and hon. Gentlemen opposite have only themselves to blame. I have had more correspondence on this proposal than on anything else since I became a Member of the House. I have had letters from constituents who have never previously written to me on any subject, from businessmen, from individuals, from old people and from doctors writing on their behalf.
    Surely the Chancellor knows that we are anxious to take whatever opportunity is given to us to bring to his attention the very valid points which have been raised by our constituents. This is the only opportunity that we have of doing it. If we cannot convince him during the course of a debate, there is little point in attempting to continue to be a Member of the House.
    I have no objection to debating far into the night. I am sure that no hon. Member has. I have no objection to going on all night and all next day, if necessary. What I am concerned with is that we should be given a reasonable opportunity to debate proposals brought before the Committee by the Government, and I do not believe that we were given such an opportunity. We were cut short in the middle of the debate in a thoroughly abrupt, objectionable and offensive manner. It is that sort of manner which has already done great harm to the nation's interests. It is that sort of manner, after all, which coloured the negotiations earlier in Rhodesia. It is that sort of manner which has caused a great deal of unrest and dissatisfaction in our relations with France. It is that typically intransigent manner which has given trouble over the Aden situation—[Interruption.]
    The Chairman: Order. I do not think that we can enter into discussions of foreign policy.
    Sir J. Eden: I was not entering into any discussion. I was merely trying to explain why I object to the manner in which this Closure was originally moved. I hope that I have made that point abundantly clear.
    I want to say to the Chancellor that there are a large number of Amendments on this tax waiting to be taken. In the Financial Secretary's speech on
    1438
    Amendment No. 266, the hon. and learned Gentleman called in aid Clause 6 of the Selective Employment Payments Bill. He made the point that there was no need for us to go over it all, emphasising this aspect and that aspect, because we should find that many of the points were met when we came to the Committee stage of the other Bill. That is not good enough, and this is a dilemma of their own creation. If they had brought these two Measures forward at the same time, if they had run these two Measures concurrently, we should not be in this difficulty, but the fact remains that the only thing before this Committee at the moment is the Finance Bill, and the only thing that we are concerned with is this Clause.
    I do not think that anyone on the benches opposite can divert us from putting forward Amendments which we believe to be necessary and desirable by saying that at a later stage we may have the opportunity to speak to them on another Bill.
    Mr. Angus Maude: Would not my hon. Friend agree that if the Opposition on this occasion divest themselves of their right to debate these matters at length, we have no guarantee that the Government will not closure the ensuing debate on the Committee stage of the other Bill before we have a chance to debate them?
    Sir J. Eden: I am obliged to my hon. Friend. That brings me to my final point, and it is really addressed to you, Sir Eric.
    As a member of this Committee, I should like some guidance from the Chair. I want to know what my position, and that of other hon. Members, is likely to be on later Amendments. As I explained—and I am sure that this applies to every one of my hon. Friends—I have had an enormous amount of correspondence on this subject. I intend to speak on every Amendment that I can. That is my wish, because I desire to make it clear to the Government that their proposals are wholly obnoxious and objectionable to a vast number of my constituents. I have been sent here to do just that.
    If it so happens that I do not catch the eye of the occupant of the Chair in

    1439
    the early stages of a debate on any Amendment, will this mean that I shall be closured? Will it mean that I shall be denied the opportunity of representing the views of my constituents? What guidance can we have as to the intentions of the right hon. Member for Belper, and of the Patronage Secretary and the Deputy Chief Whip, and of the decision which may be taken by the Chair at any time? What critera will the Chair adopt in deciding whether to accept a Closure Motion, such as was done earlier today?
    It is very important that we know exactly what are the intentions not only of right hon. Gentlemen opposite, but of the Chair as well, so that we may be certain that we shall have an opportunity to speak to these Amendments. I emphasise this point, because if I had been called I would have done my best to keep strictly to the terms of Amendment No. 268. Unless one gets an opportunity to speak to the Amendments, it will be necessary to make a speech on the Question "That the Clause stand part of the Bill" to cover all the points for fear that one will not get another opportunity to speak.
    Mr. Harold Lever: Is not the hon. Gentleman complaining of the rules of order? The Chief Whip is not in a position to give an indication of when he will move the Closure. It is for the Chair to decide when the Motion for the Closure can be accepted.
    Sir J. Eden: That is a fair comment, and that is why I was addressing my remarks to the Chair, in the hope that I might get some guidance from the Chair as to the terms on which the Closure Motion would be accepted. But if that is not to happen, I shall not persist in this.
    I repeat to the Chancellor that at any and every opportunity that I get to do so I shall emphasise that the proposals in this Selective Employment Tax are utterly wrong, and that they are wholly disliked by my constituents, by my
    hon. Friends, and, I believe, by some hon. Gentlemen opposite. I hope that we make the point abundantly clear that we thoroughly object to these proposals. So strongly do I feel on this subject that I take this opportunity of supporting this Motion. I support it in particular because of the manner in which the right hon. Gentleman the Member for Belper barged his way into the Committee and bullied his way to cutting short the debate. I hope that it sticks in his throat.
    1.45 a.m.
    Mr. Pavitt: The Committee will know that I have sat through the whole of the debate except for 20 minutes about 10 o'clock. This is a serious Clause which is before the Committee. Ten debates were scheduled on 35 Amendments, some of which were my own. We have had some thoughtful contributions from both sides of the Committee and I was under the impression that hon. Members opposite were serious in their intentions to probe the tax and to seek to gain amelioration where they thought it was due and just. The present tactic is purely one of obstruction, unworthy of some of the contributions that hon. Members have made in their real concern for their constituents.
    One hopes that, having got only three of the debates through, we will be able to proceed with the serious things which have given most of us a considerable amount of concern and caused most of us to have to make difficult decisions. It is an abuse of the privileges of the Opposition to prevent their hon. Friends and hon. Members from proceeding with this debate in a serious manner. I hope that we will be allowed to proceed.
    The Parliamentary Secretary to the Treasury (Mr. Edward Short)rose in his place and claimed to move, That the Question be now put.
    Question put, That the Question be now put:—
    The Committee divided: Ayes 161, Noes 93.

    Division No. 63.]

    AYES

    [1.46 a.m.

    Allaun, Frank (Saltord, E.)

    Barnes, Michael

    Blackburn, F.

    Allen, Scholefield

    Benn, Rt. Hn. Anthony Wedgwood

    Boardman, H.

    Archer, Peter

    Bennett, James (G'gow, Bridgton)

    Booth, Albert

    Armstrong, Ernest

    Bessell, Peter

    Braddock, Mrs. E. M.

    Atkinson, Norman (Tottenham)

    Binns, John

    Bray, Dr. Jeremy

    Bagier, Gordon A. T.

    Bishop, E. 8.

    Brooks, Edwin

    Brown, Rt. Hon. George (Belper)

    Hoffer, Eric S.

    Parker, John (Dagenham)

    Brown, Hugh D. (G'gow, Provan)

    Henig, Stanley

    Pavitt, Laurence

    Brown, Bob(N'c'tle-upon-Tync.W.)

    Hilton, W. S.

    Pentland, Norman

    Brown, R. W. (Shoreditch & F'bury)

    Hooley, Frank

    Perry, Ernest G. (Battersea, S.)

    Callaghan, Rt. Hn. James

    Hooson, Emlyn

    Perry, George H. (Nottingham, S.)

    Carmichael, Neil

    Hoy, James

    Prentice, Rt. Hn. R. E.

    Coe, Denis

    Hughes, Emrys (Ayrshire, S.)

    Price, Christopher (Perry Barr)

    Coleman, Donald

    Hunter, Adam

    Redhead, Edward

    Conlan, Bernard

    Hynd, John

    Reynolds, G. W.

    Corbet, Mrs. Freda

    Jackson, Peter M. (High Peak)

    Roberts, Albert (Normanton)

    Craddock, George (Bradford, S.)

    Jenkins, Hugh (Putney)

    Robertson, John (Paisley)

    Crawshaw, Richard

    Johnson, James (K'ston-on-Hull, W.)

    Robinson, Rt. Hn. Kenneth (St.P'c'as)

    Cullen, Mrs, Alice

    Jones.Rt.Hn.Sir Elwyn (W.Ham,S.)

    Robinson, W. O. J. (Walth'stow, E.)

    Dalyell, Tarn

    Judd, Frank

    Roebuck, Roy

    Davidson, Arthur (Accrington)

    Kenyon, Clifford

    Rogers, George

    Davidson, James (Aberdeenshire, W.)

    Lestor, Miss Joan

    Rose, Paul

    Davies, Dr. Ernest (Stretford)

    Lever, Harold (Cheetham)

    Ryan, John

    Davies, G. Elfed (Rhondda, E.)

    Lever, L. M. (Ardwick)

    Shaw, Arnold (Ilford, S.)

    Davies, Ifor (Gower)

    Lewis, Ron (Carlisle)

    Shore, Peter (Stepney)

    Davies, Robert (Cambridge)

    Lomas, Kenneth

    Short, Rt. Hn. Edward (N'c'tle-u-Tyne)

    Dell, Edmund

    Loughlin, Charles

    Silkin, John (Deptford)

    Dempsey, James

    Luard, Evan

    Silkin, S. C. (Dulwich)

    Dewar, Donald

    Lubbock, Eric

    Silverman, Julius (Aston)

    Diamond, Rt. Hn. John

    Lyon, Alexander W. (York)

    Slater, Joseph

    Dickens, James

    MacDermot, Niall

    Small, William

    Doig, Peter

    Macdonald, A. H.

    Steel, David (Roxburgh)

    Dunnett, Jack

    McGuire, Michael

    Summerskill, Hn. Dr. Shirley

    Dunwoody, Mrs. Gwyneth (Exeter)

    McKay, Mrs. Margaret

    Taverne, Dick

    Dunwoody, Dr. John (F'th & C'b'e)

    Mackenzie, Atasdair (Ross&Crom'ty)

    Thorpe, Jeremy

    Eadie, Alex

    Mackenzie, Gregor (Rutherglen)

    Tinn, James

    Edelman, Maurice

    Mackle, John

    Urwin, T. W.

    Faulds, Andrew

    Maclennan, Robert

    Wainwright, Richard (Colne Valley)

    Fernyhough, E.

    McNamara, J. Kevin

    Walden, Brian (All Saints)

    Finch, Harold

    Manuel, Archie

    Walker, Harold (Doncaster)

    Foley, Maurice

    Mapp, Charles

    Watkins, David (Consett)

    Ford, Ben

    Mendelson, J. J.

    Wellbeloved, James

    Fraser, John (Norwood)

    Molloy, William

    Wells, William (Walsall, N.)

    Gardner, A. J.

    Moonman, Eric

    Whitaker, Ben

    Gordon Walker, Rt. Hn. P. C.

    Morris, Alfred (Wythenshawe)

    White, Mrs. Eirene

    Gregory, Arnold

    Moyle, Roland

    Williams, Clifford (Abertillery)

    Grey, Charles (Durham)

    Mulley, Rt. Hn. Frederick

    Wilson, William (Coventry, S.)

    Griffiths, David (Rother Valley)

    Oakes, Gordon

    Winnick, David

    Griffiths, Will (Exchange)

    Ogden, Eric

    Winstanley, Dr. M. P.

    Hamilton, James (Bothwell)

    O'Malley, Brian

    Winterbottom, R. E.

    Hamilton, William (Fife, W.)

    Orme, Stanley

    Woof, Robert

    Hannan, William

    Owen, Dr. David (Plymouth, S'tn)

    Harper, Joseph

    Owen, Will (Morpeth)

    TELLERS FOR THE AYES:

    Harrison, Walter (Wakefield)

    Paget, R. T.

    Mr. Charles R. Morris and

    Hazell, Bert

    Pardoe, John

    Mr. Whitlock.

    NOES

    Allason, James (Hemel Hempstead)

    Hamilton, Marquess of (Fermanagh)

    More, Jasper

    Astor, John

    Harvey, Sir Arthur Vere

    Munro-Lucas-Tooth, Sir Hugh

    Baker, W. H. K.

    Hastings, Stephen

    Murton, Oscar

    Bateford, Brian

    Hawkins, Paul

    Nott, John

    Biffen, John

    Heald, Rt. Hn. Sir Lionel

    Onslow, Cranley

    Biggs-Davison, John

    Higgins, Terence L.

    Orr-Ewing, Sir Ian

    Black, Sir Cyril

    Hiley, Joseph

    Page, Graham (Crosby)

    Blaker, Peter

    Hirst, Geoffrey

    Peel, John

    Boyd-Carpenter, Rt. Hn. John

    Hogg, Rt. Hn. Quintin

    Percival, Ian

    Boyle, Rt. Hn. Sir Edward

    Hordern, Peter

    Pink, R. Bonner

    Brinton, Sir Tatton

    Howell, David (Guildford)

    Pounder, Rafton

    Brown, Sir Edward (Bath)

    Hunt, John

    Price, David (Eastleigh)

    Bruce-Gardyne, J.

    Iremonger, T. L.

    Pym, Francis

    Campbell, Gordon

    Jenkin, Patrick (Woodford)

    Ramsden, Rt. Hn. James

    Carlisle, Mark

    Jopling. Michael

    Rees-Davies, W. R.

    Channon, H. P. G.

    Kimball, Marcus

    Renton, Rt. Hn. Sir David

    Chichester-Clark, R.

    King, Evelyn (Dorset, S.)

    Ridley, Hn. Nicholas

    Clark, Henry

    Kirk, Peter

    Roots, William

    Clegg, Walter

    Kitson, Timothy

    St. John-Stevas, Norman

    Cooke, Robert

    Knight, Mrs. Jill

    Scott, Nicholas

    Deedes, Rt. Hn. W. F. (Ashford)

    Langford-Holt, Slr John

    Sharples, Richard

    Dodds-Parker, Douglas

    Longden, Gilbert

    Smith, John

    Eden, Sir John

    Loveys, W. H.

    Thatcher, Mrs. Margaret

    Fortescue, Tim

    MacArthur, Ian

    Turton, Rt. Hn. R. H.

    Foster, Sir John

    Maclean, Sir Fitzroy

    Walker, Peter (Worcester)

    Gibson-Watt, David

    Macleod, Rt. Hn. lain

    Ward, Dame Irene

    Glover, Sir Douglas

    McMaster, Stanley

    Weatherill, Bernard

    Goodhart, Philip

    Maude, Angus

    Webster, David

    Goodhew, Victor

    Maxwell-Hyslop, R. J.

    Whitelaw, William

    Cower, Raymond

    Mills, Peter (Torrington)

    Grant-Ferris, R.

    Miscampbell, Norman

    TELLERS FOR THE NOES:

    Griffiths, Eldon (Bury St. Edmunds)

    Mitchell, David (Basingstoke)

    Mr. Grant and Mr. Younger

    Question put accordingly, That the Chairman do report Progress and ask leave to sit again: —
    The Committee divided: Ayes 93, Noes, 159.

    Division No. 64.]

    AYES

    [1.56 a.m.

    Allason, James (Hemel Hempstead)

    Griffiths, Eldon (Bury St. Edmunds)

    Munro-Lucas-Tooth, Sir Hugh

    Astor, John

    Hamilton, Marquess of (Fermanagh)

    Murton, Oscar

    Baker, W. H. K.

    Harvey, Sir Arthur Vere

    Nott, John

    Batsford, Brian

    Hastings, Stephen

    Onslow, Cranley

    Biffen, John

    Hawkins, Paul

    Orr-Ewing, Sir Ian

    Biggs-Davison, John

    Heald, Rt. Hn. Sir Lionel

    Page, Graham (Crosby)

    Black, Sir Cyril

    Higgins, Terence L.

    Peel, John

    Blaker, Peter

    Hiley, Joseph

    Percival, Ian

    Boyd-Carpenter, Rt. Hn. John

    Hirst, Geoffrey

    Pink, R. Bonner

    Boyle, Rt. Hn. Sir Edward

    Hogg, Rt. Hn. Quintin

    Pounder, Rafton

    Brinton, Sir Tatton

    Hordern, Peter

    Price, David (Eastleigh)

    Brown, Sir Edward (Bath)

    Howell, David (Guildford)

    Pym, Francis

    Bruce-Gardyne, J.

    Hunt, John

    Ramsden, Rt. Hn. James

    Campbell, Gordon

    Iremonger, T. L.

    Rees-Davies, W. R.

    Carlisle, Mark

    Jenkin, Patrick (Woodford)

    Renton, Rt. Hn. Sir David

    Channon, H. P. G.

    Jopling, Michael

    Ridley, Hn. Nicholas

    Chichester-Clark, R.

    Kimball, Marcus

    Roots, William

    Clark, Henry

    King, Evelyn (Dorset, S.)

    St. John-Stevas, Norman

    Clegg, Walter

    Kirk, Peter

    Scott, Nicholas

    Cooke, Robert

    Kitson, Timothy

    Sharples, Richard

    Deedes, Rt. Hn. W. F. (Ashford)

    Knight, Mrs. Jill

    Smith, John

    Dodds-Parker, Douglas

    Langford-Holt, Sir John

    Thatcher, Mrs. Margaret

    Eden, Sir John

    Longden, Gilbert

    Turton, Rt. Hn. R. H.

    Fortescue, Tim

    Loveys, W. H.

    Walker, Peter (Worcester)

    Foster, Sir John

    MacArthur, Ian

    Ward, Dame Irene

    Gibson-Watt, David

    Maclean, Sir Fitzroy

    Weatherill, Bernard

    Glover, Sir Douglas

    Macleod, Rt. Hn. Iain

    Webster, David

    Goodhart, Philip

    McMaster, Stanley

    Whitelaw, William

    Goodhew, Victor

    Maude, Angus

    Younger, Hn. George

    Gower, Raymond

    Maxwell-Hyslop, R. J.

    Grant, Anthony

    Mills, Peter (Torrington)

    TELLERS FOR THE AYES

    Grant-Ferris, R.

    Miscampbell, Norman

    Mr. More and

    Mr. David Mitchell.

    NOES

    Allaun, Frank (Salford, E.)

    Diamond, Rt. Hn. John

    Kenyon, Clifford

    Allen, Scholefield

    Dickens, James

    Lestor, Miss Joan

    Archer, Peter

    Doig, Peter

    Lever, Harold (Cheetham)

    Armstrong, Ernest

    Dunnett, Jack

    Lever, L. M. (Ardwick)

    Atkinson, Norman (Tottenham)

    Dunwoody, Mrs. Gwyneth (Exeter)

    Lewis, Ron (Carlisle)

    Bagier, Gordon A. T.

    Dunwoody, Dr. John (F'th & C'b'e)

    Lomas, Kenneth

    Barnes, Michael

    Eadie, Alex

    Loughlin, Charles

    Benn, Rt. Hn. Anthony Wedgwood

    Edelman, Maurice

    Luard, Evan

    Bennett, James (G'gow, Bridgeton)

    Faulds, Andrew

    Lubbock, Eric

    Bessell, Peter

    Fernyhough, E.

    Lyon, Alexander W. (York)

    Binns, John

    Finch, Harold

    MacDermot, Niall

    Bishop, E. S.

    Foley, Maurice

    Macdonald, A. H.

    Blackburn, F.

    Ford, Ben

    McGuire, Michael

    Booth, Albert

    Fraser, John (Norwood)

    McKay, Mrs. Margaret

    Braddock, Mrs. E. M.

    Gardner, A. J.

    Mackenzie, Alasdair (Ross&Crom'ty)

    Bray, Dr. Jeremy

    Gordon Walker, Rt. Hn. P. C.

    Mackenzie, Gregor (Rutherglen)

    Brooks, Edwin

    Gregory, Arnold

    Mackie, John

    Brown, Rt. Hn. George (Belper)

    Grey, Charles (Durham)

    Maclennan, Robert

    Brown, Hugh D. (G'gow, Provan)

    Griffiths, David (Rother Valley)

    McNamara, J. Kevin

    Brown,Bob (N'c'tle-upon-Tyne,W.)

    Griffiths, Will (Exchange)

    Manuel, Archie

    Brown, R. W. (Shoreditch & F'bury)

    Hamilton, James (Bothwell)

    Mapp, Charles

    Callaghan, Rt. Hn. James

    Hamilton, William (Fife, W.)

    Mendelson, J. J.

    Carmichael, Neil

    Hannan, William

    Molloy, William

    Coe, Denis

    Harper, Joseph

    Moonman, Eric

    Coleman, Donald

    Harrison, Walter (Wakefield)

    Morris, Alfred (Wythenshawe)

    Conlan, Bernard

    Hazell, Bert

    Moyle, Roland

    Corbet, Mrs. Freda

    Heffer, Eric S.

    Mulley, Rt. Hn. Frederick

    Craddock, George (Bradford, S.)

    Henig, Stanley

    Oakes, Cordon

    Crawshaw, Richard

    Hilton, W. S.

    Ogden, Eric

    Cullen, Mrs. Alice

    Hooley, Frank

    O'Malley, Brian

    Dalyell, Tarn

    Hooson, Emlyn

    Orme, Stanley

    Davidson, Arthur (Accrington)

    Hoy, James

    Owen, Dr. David (Plymouth, S'tn)

    Davidson, James (Aberdeenshire, W.)

    Hughes, Emrys (Ayrshire, S.)

    Owen, Will (Morpeth)

    Davies, Dr. Ernest (Stretford)

    Hunter, Adam

    Paget, R. T.

    Davies, G. Elfed (Rhondda, E.)

    Hynd, John

    Pardoe, J.

    Davies, Ifor (Gower)

    Jackson, Peter M. (High Peak)

    Parker, John (Dagenham)

    Davies, Robert (Cambridge)

    Jenkins, Hugh (Putney)

    Pavitt, Laurence

    Dell, Edmund

    Johnson, James (K'ston-on-Hull,W.)

    Pentland, Norman

    Dempsey, James

    Jones,Rt.Hn.SirElwyn(W.Ham,S.)

    Perry, Ernest G. (Battersea, S.)

    Dewar, Donald

    Judd, Frank

    Perry, George H. (Nottingham, S.)

    Prentice, Rt. Hn. R. E.

    Short,Rt.Hn.Edward (N'c'tle-u-Tyne)

    Walker, Harold (Doncaster)

    Price, Christopher (Perry Barr)

    Silkin, John (Deptford)

    Watkins, David (Consett)

    Redhead, Edward

    Silkin, S. C. (Dulwich)

    Wellbeloved, James

    Reynolds, G. W.

    Silverman, Julius (Aston)

    Wells, William (Walsall, N.)

    Roberts, Albert (Normanton)

    Slater, Joseph

    Whitaker, Ben

    Robertson, John (Paisley)

    Small, William

    White, Mrs. Eirene

    Robinson,Rt.Hn.Kenneth(St.P'c'as)

    Steel, David (Roxburgh)

    Williams, Clifford (Abertillery)

    Robinson, W. O. J. (Walth'stow, E.)

    Summerskiil, Hn. Dr. Shirley

    Wilson, William (Coventry, S.)

    Roebuck, Roy

    Taverne, Dick

    Winnick, David

    Rogers, George

    Thorpe, Jeremy

    Winterbottom, R. E.

    Rose, Paul

    Tinn, James

    Woof, Robert

    Ryan, John

    Urwin, T. W.

    Shaw, Arnold (Ilford, S.)

    Wainwright, Richard (Colne Valley)

    TELLERS FOR THE NOES:

    Shore, Peter (Stepney)

    Walden, Brian (All Saints)

    Mr. Charles R. Morris and

    Mr. Whitlock.

    Mr. Bessell: I beg to move Amendment No. 339, in page 48, line 21, after "shillings", to insert:
    "except within a development area so designated by the Board of Trade, where the amount shall be twelve shillings and sixpence".
    The Chairman: With this Amendment can be discussed Amendments No. 340, in line 23, after "sixpence", insert:
    "except within a development area so designated by the Board of Trade, where the amount shall be six shillings and threepence".
    No. 341, in line 25, after "sixpence", insert:
    "except within a development area so designated by the Board of Trade, where the amount shall be six shillings and threepence ".
    No. 343, in line 27, at end insert:
    "except within a development area so designated by the Board of Trade, where the amount shall be four shillings ".
    No. 148, in line 27, at end insert:
    Provided that in the case of persons who are employed in any area which the Chancellor of the Exchequer may by order determine the tax shall be one penny for such period as may be specified in the said order.
    No. 211, in line 27, at end insert:
    Provided that Her Majesty's Government may by order impose varying rates of tax in different parts of the country.
    and No. 359, in page 50, line 24, at end add:
    (10) The Minister shall by order restrict or vary the application of this section in respect of such local government areas as he may prescribe.
    Mr. Bessell: At this time of the morning it is difficult to initiate a debate, and particularly after the somewhat hilarious and at times disturbing interlude which we have just passed through. However, I believe that hon. Members on both sides of the Committee are satisfied that this series of Amendments is of particular importance not only to their own constituents if they represent development areas, but also to the whole economy of the country,
    1446
    because it is true to say that the purpose behind the Government's avowed intention to develop certain areas of the country is in order not only to assist those areas and the people who live in them but generally to strengthen the economy of the nation as a whole.
    This group of Amendments, in the names of my hon. Friend the Member for Devon, North (Mr. Thorpe), Cornwall, North (Mr. Pardoe) and myself, and which we are glad to see has been supported by the hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin), are self-explanatory. We are seeking to reduce the rate of this tax by 50 per cent. in the development areas so designated by the Board of Trade. At this stage I should like to say that we do not on this bench like the Selective Employment Tax in its present form, but we are realistic enough to know that when the Government have a majority of nearly 100, there is very little likelihood indeed that a Clause of this sort will be removed from their Finance Bill. Therefore, we are seeking a compromise which I hope and believe may commend itself not only to Members of the Conservative Opposition but also to Members of the Government party who represent development areas in their own constituencies.
    Her Majesty's Government have made it one of the main items of their policy to extend special aid to certain areas of the country, and this is a principle of which we in the Liberal Party approve. Indeed, we believe that the Government have been wholly right in adopting this attitude to areas of the nation which have been neglected for far too long. Moreover, we believe that it is important to correct the imbalance of the nation's economy, that certain areas of the country should be designated for special relief and special assistance.
    We are all too well aware of the congestion in terms of traffic and in terms of

    1447
    people, the over-employment, the speculation which has taken place in land, and the housing shortages in areas like the South-East, in parts of the Midlands and parts of the northern industrial belt. We are aware equally of the under-employment, the depopulation, the low wage standards and the many problems which have confronted areas like the Highlands of Scotland, Mid-Wales and the Southwest of England from which I come.
    To this end, Her Majesty's Government over a year ago initiated a number of economic planning councils, including one for the South-West, and it is part of their policy to do what they can to assist these areas in a pattern of growth and development. I venture to suggest that anyone who looks at Clause 42 logically must agree that a Selective Employment Tax applied in full to the areas which the Government have designated as being suitable for development is a complete contradiction of the Government's own policy.
    It is a contradiction of their policy, but only in its present form, and I should like to make it clear that we on this bench are not by any means opposed to the principle of a Selective Employment Tax. I think that my hon. Friend the Member for Cheadle (Dr. Winstanley) in his speech on Thursday made this point abundantly clear to the House and it will be within the recollection of many Members on both sides of the Committee.
    We believe that a payroll tax or Selective Employment Tax varied according to the resources of the various regions could indeed assist the Government in pursuing the policy of regional development and the special aid to development areas which they have declared an integral part of their overall policy for the economic recovery of the nation.
    I would say to the Chancellor that the purpose of the Amendment is to help the Government to achieve the objects to which they have set their hand. To that extent, I hope and believe that the Chancellor will find it possible to accept the Amendment, which I am sure will certainly have the approval of the President of the Board of Trade who has shown himself to be eager, along with the First Secretary, to pursue this policy of regional development.
    Mr. Winterbottom: When the hon. Gentleman is speaking of the payroll tax, I should like him to make it clear, because of what has been said previously, that the Liberal Party prefer a graduated payroll tax instead of the Selective Employment Tax, and that the hon. Gentleman is accepting the Selective Employment Tax as an alternative.
    Mr. Bessell: I am obliged for the hon. Member's intervention. I realise that at this time of night one's thinking is sometimes not as clear as one would like it to be.
    I accept what the hon. Member said. The Liberal Party would prefer a payroll tax in the form he suggested as compared with the Selective Employment Tax in its present form, but I am not so foolish as to think I can persuade the Government to accept a major change at this stage of the Finance Bill.
    I want now to refer to the effects of Clause 42 on Cornwall. I am doing this in the knowledge that my hon. Friends, including the hon. and learned Member for Montgomery (Mr. Hooson), will undoubtedly wish to explain to the Committee the way in which this tax will affect Mid-Wales, and indeed that some of my hon. and right hon. Friends who represent constituencies in Scotland will wish to put before the Committee the problem as it affects their own areas. Indeed, the arguments which I hope to deploy for a few moments could apply equally, I believe, to any development area throughout the British Isles.
    I should like to take as my first example of the effect of the Selective Employment Tax in its present form the effect it will have on the tourist industry, and anyone who believes that the tourist industry is not a vital part of the development of areas like Cornwall, Mid-Wales or Scotland, lacks a proper understanding of the problems of those areas.
    2.15 a.m.
    In 1965, about 2 million tourists came to the Duchy, and they spent about £42 million. The effect of this upon the economy of the country is two-fold. The coming of tourists to a development area assists the general economy and growth of the area. In addition, it assists the Chancellor in his vital task of balancing our overseas payments. It is estimated that visitors to this country from

    1449
    abroad last year spent something over £300 million in foreign currency here. But against that we have to set the amount of British currency expended by our own people who go abroad for holidays. It is in this way that an area like Cornwall can contribute to the balance of payments.
    We know that the rate at which the British tourist spends money overseas is very little short of the amount spent by foreign tourists coming to this country. This being so, it is vital that we do everything in our power to assist areas like Cornwall in keeping down the price of holiday and tourist accommodation to a level which will enable them to continue to attract British tourists who might otherwise go abroad.
    Dr. John Dunwoody: There is a small point to be emphasised here. Figures for the last complete year in Cornwall show that only 2 per cent. of visitors came from overseas. There is a problem here, but to present it, so far as Cornwall is concerned, in terms of large overseas earnings is to falsify the position.
    Mr. Bessell: I did not suggest for a moment that any proportion or any large proportion of the amount I gave came from overseas visitors. I said that these were visitors to Cornwall spending about £42 million in British money, and, if they were prevented from coming to Cornwall by higher hotel prices, they might very well go overseas; thus adding to our balance of payments difficulties. I am sure the hon. Gentleman will accept that point as valid.
    The British resort areas like Cornwall save the Chancellor an unknown sum of money. But the Selective Employment Tax could encourage people to go abroad. This is a valid illustration of how a development area, in spite of the intense economic problems which may beleaguer it, can assist the general economy of the country if itself assisted to do so. I have always maintained that it has never been part of the argument of the people of Cornwall that they seek assistance purely for their own economic benefit. On the contrary, we seek to improve our lot in order that we may make a valid and valuable contribution to the economy of the nation as a whole.
    1450
    If the Selective Employment Tax is applied in full to the hotel and catering trades in Cornwall, as elsewhere, it must inevitably result in an increase in the cost of holidays there, which in turn will discourage people from coming to an area which the Board of Trade and the Government have declared to be one which they wish to assist in the interests of the national economy as well as of the people living there.
    I want next to say a word about industry. The purpose of designating certain areas as development areas is to increase the opportunities for employment within those areas. If the Selective Employment Tax is applied at the full rate within the development areas it will tend to discourage potential developers and investors from going to those parts of the country. On the other hand, the Government's own policy could be furthered by reducing the rate of Selective Employment Tax within the development areas because the effect would be to attract industrial development within those areas which might otherwise take place in other parts of the country.
    That is why I suggest in all seriousness to the Chief Secretary that it is an integral part of the Government's own policy of promoting the regions and the development areas that the Amendment should be accepted, because it would have precisely the effect which he and the Government require, of attracting to those areas development which might otherwise take place within the congested areas of the South-East, the Midlands or the North.
    I would next say a word about housing. There is no hope of attracting additional population to the development areas unless we can provide the people who must go there to enable the development to take place with proper housing accommodation. The majority of the development areas cannot become viable economic units unless there is an increase in the population, and an increase in the population is not dependent purely upon the development of the integral trades and industries, such as agriculture, horticulture and tourism or even tin mining and china clay development. It also involves the provision of proper housing accommodation.
    The Selective Employment Tax will hit the builder, particularly the small builder, very hard, and it will not attract to the

    1451
    industry any additional labour. Yet this is one of the most vital of our industries today. Also, it will not cause any person who is employed in the building industry to be removed from his post to go into any other occupation. We know that that cannot be so because of the shortage of labour in the building trade. But what we know beyond all possible doubt is that the Selective Employment Tax will once again lift the price of the finished article, in this case mainly the home which the builder is setting out to construct.
    Therefore, I believe that within the development areas, where we know that housing, new hospitals, new schools and new factories must be built, it is vitally important that the tax should be levied at a completely different rate from that which will be charged in the rest of the country. I do not apologise for making a special plea on behalf of the development areas, for they are already recognised by the Government as parts of the country which require special help.
    Having recognised that, there is nothing inconsistent with their policy if the Government accept the Amendment. I see no reason why they should not be able to accept it. If they fail to do so, they will be in clear contradiction of the policy upon which they fought the election and which we on the Liberal bench welcome because we believe that this kind of special development is essential. Housing, the tourist industry, hotels and catering, industrial development, schools, hospitals and roads—all these things within the development areas are affected adversely by the imposition of the tax.
    Although we should like to see the Clause removed altogether, we know that this is a vain hope. Hence this Amendment. We have already had a long day's journey into night and it looks as though, before long, we shall see dawn breaking. I believe that hon. Members on this side of the Committee and, indeed, hon. Members opposite, will wish to speak on this vital subject of the development areas and the effect of the tax. Therefore, without further comment, I commend the Amendment to the Committee.
    Mr. J. Grimond: I shall not go again over the
    1452
    admirable points on Amendment No. 339 made by my hon. Friend the Member for Bodmin (Mr. Bessell). I do not like this tax in its present form. I have made that clear in the debate on the Budget and since. I have been fortified in my objection by numerous protests from all kinds of bodies both locally within my constituency and further afield.
    One of the advantages of a well-thought-out employment tax should have been to help the development areas because it could have, been levied at a lower rate in such areas than in areas of full employment such as the Midlands. But the way in which the tax is to be imposed will achieve the opposite. The people who will gain are the already over-employed areas around Birmingham and in the South-East.
    Earier, we discussed the effect of the tax upon various trades and occupations. One of the points which should now engage us is its effect upon various areas. The purpose of Amendment No. 148, standing in my name and the names of my hon. Friends, is to give the Chancellor greater flexibility over the areas and timing of the application of the tax to those areas. In this, I understand, it has an objective similar to that of Amendment No. 211 and Amendment No. 359.
    This is not the occasion for developing a general argument against the tax as a whole but, although we may be unable to abolish this highly deleterious tax altogether, the Amendments would be of great advantage in meeting one of the points made by the Chancellor himself.
    Mr. Evelyn King: Is it suggested that we should pass Amendments No. 148 and Amendment No. 339?
    2.30 a.m.
    Mr. Grimond: I understand that one Amendment has been selected to be moved and the others are to be discussed with it. [HON. MEMBERS: "Wake up."]
    Mr. Evelyn King: I was asking the right hon. Gentleman whether he was arguing that both Amendments should become law, or whether what he is proposing is an alternative to the Amendment of his hon. Friend.
    Mr. Grimond: I do not want to get diverted. I am referring to Amendment No. 148, the object of which is to give the Chancellor some flexibility and I am going on——
    Mr. Michael Jopling rose——
    Mr. Grimond: I only mentioned the other Amendments because I thought that they had a similar purpose. If it makes the matter easier, please forget anything that I said.
    Mr. Jopling: The Committee would be most grateful to know which of the Amendments is Liberal Party policy.
    Mr. Thorpe: On a point of order. Would you be good enough, Mr. Irving, to repeat, for the benefit of hon. Members not able to hear, your Ruling at the beginning of the discussion? Am I not right in thinking that what you told the Committee was that the Amendment which would be discussed would be Amendment No. 339 but, as has been the custom throughout the whole of this Committee, it would be in order to discuss other Amendments alongside of it?
    Mr. Evelyn King: The hon. Gentleman has completely misunderstood the point, which is not what can be argued, but what is the Liberal Party arguing?
    Mr. Grimond: It is a common practice to have a variety of Amendments down in the hope that, possibly, the Government may find one more acceptable than the others. We should like to see the Government adopt the Amendment moved by my hon. Friend the Member for Bodmin (Mr. Bessell). The Chairman has ruled that the other Amendment, which I am now arguing, can be discussed with it. May I proceed with the discussion, because this is not uncommon in the conduct of Finance Bills.
    The point that I was trying to make was that the Chancellor has said that this tax may well have to be amended. My view is that he will have to amend it very quickly. I believe that he will find that many of the objections to the tax, for example, in its effect on the tourist industry, will take effect very quickly. It may have a much more serious effect than the Government realise, not only upon the hotels, but upon many subsidiary occupations, which are carried
    1454
    on in the tourist areas, shops, garages, and small businesses of all kinds. There will be areas in which it would be equitable to lessen the incidence of the tax from time to time. I do not want to go over again in detail the effect on the Scottish Islands of the seamen's strike, but it is a very good example of what I mean. It is the same people there, who have been devastatingly hit by the strike, who are going to be hit again by the tax.
    This is an example of an occasion upon which the Chancellor ought to have some power to remit the tax. He has refused to accept an earlier Amendment giving him power to vary the date at which it comes into operation and I am suggesting a further alternative. He can make provision for exempting certain areas for a certain period of time from the full incidence of the tax.
    I do not want to reopen the argument for the general reduction of the tax upon development areas, but on his own admission the Chancellor agrees that the tax will have to be amended. In the face of the very cogent arguments put forward about the effects of the tax upon certain areas, he should consider whether he ought not now to take some power to enable him to vary its incidence in a particular area.
    Mr. Winterbottom: I have a great deal of sympathy with the Amendment, but I also have a great deal of practical knowledge, and I must face some of the difficulties associated with the subject-matter.
    I believe in a proper tax, and a proper tax would meet the needs, for instance, of the tourist industry. But if we have the present type of selective tax, however we try to amend it, we shall be in the difficulty of creating even more anomalies—and goodness knows we have enough now. It is easy to set up something which is contradictory to what we intend to set up. I have great sympathy with the tourist industry, and I think that we should have been able to graduate a proper poll tax to meet the needs of the development districts. But how can we do that with a tax of this description?
    The right hon. Member for Orkney and Shetland (Mr. Grimond) is perfectly right: we cannot deal in isolation with the districts which meet the needs of

    1455
    the tourist industry. We have to deal also with the garages, the shops, and a whole host of things touched on by this tax. Then there is the problem of the catering industry. Where are we to start and end?
    The catering industry is a vast conglomeration of things. For my sins, I was one of those who served on the catering wages boards which were set up by the late Ernest Bevin to meet the needs of the catering industry. We came across some very serious problems. Five boards were set up. One was a canteen board. We do not need to deal with that. There was the licensed residential establishments board, which dealt with hotels and licensed restaurants. But they are not confined to areas which largely take in tourists; they are throughout the country. How are we to make a just and right distinction for the tourist industry? We cannot make a separation into localities or seasons because some of the tourist industry is dependent on purely seasonal trade. Difficulty would be caused if we attempted to draw a distinction under the Selective Employment Tax, because some licensed establishments and restaurants would be covered and some would not be covered.
    How would we deal with the public houses, because they are part of the catering industry? They come within the category of licensed non-residential establishments.
    Then there is the board dealing with unlicensed places of refreshment, which covers all the catering establishments excluding those unlicensed places which are known as private hotels and boarding houses, for which another board was set up but which has fallen into desuetude because nobody could agree on it. Something would have to be done in regard to the wages paid to those people in the boarding houses and private hotels if one were to justify something in the nature of a concession to that part of the catering industry for the tourist trade.
    It is, therefore, a complicated task that the Liberal Party have set out in the Amendment to this selective tax. Whilst I have all the sympathy in the world with them, I do not see how they can overcome some of the difficulties which flow from the industrial life of Britain, and solve them in such a way as to meet the
    1456
    immediate needs of the Selective Employment Tax.
    I rather think that it is because of the peculiarities and the complications that the Government must be automatically compelled to reject the Amendment. I say that with great regret, because I hope that out of all the discussions that are taking place in this Committee and in the House on the Finance Bill we shall not enforce, because "enforce" is the wrong word, but possibly inspire some forward move concerning this type of tax to make it possible for it to be introduced by the Government to meet the special needs of the development areas, including the tourist industry and the catering industry in the special areas of the country where these predominate.
    Even though I think that the Amendment is well conceived and something that is necessary, I visualise success with it only if fundamentally this Selective Employment Tax is changed into the type of tax that most of us would like to see.
    Mr. Paul Dean: It is a matter of great regret that we begin a debate on this highly important subject after 2 o'clock in the morning. This is the first occasion during the progress of the Bill when we have been able to deploy the case for regional rates of tax. It is equally deplorable that the First Secretary, having blundered in here earlier and gagged our debate, should not now be here when we are discussing a subject concerning regional rates of tax which is of prime concern to his Ministry.
    Having said that, I should like to address my remarks largely to Amendment No. 211, tabled by a number of my hon. Friends and myself representing West Country constituencies. In that Amendment, rather like the Amendment of the right hon. Member for Orkney and Shetland (Mr. Grimond), we do not intend to pin down the Chancellor to specific rates of tax. Our intention is to establish that the rates should vary in accordance with economic conditions in different parts of the country.
    I go further than the hon. Member for Bodmin (Mr. Bessell). I believe that if this regional rate of tax is to be successful, it should go wider than merely the development areas. If, however, we are to have a selective tax of this kind, it is a fundamental mistake to make it selective

    1457
    by industries rather than geographically. I hope to establish the case by reference in particular to the West Country. In doing so I recognise that the case for other parts of the country, particularly Scotland, is equally strong, but I draw my illustrations from the West Country because, naturally, I know more about that than any other area.
    2.45 a.m.
    This will hit the West Country hard, for two main reasons. The first is the economic difficulties which we face art the moment, and the second is that the service industries predominate in our economy. On the economic side I should like to remind the Committee of one or two important facts which emphasise the case for a varying regional rate. The first is the age structure of our population in the West Country. We have nearly 4 per cent. more people over working age than the country as a whole. Indeed, this percentage is growing year by year. We have now over 15 per cent. of the population aged 65 or over, in comparison with under 12 per cent. for the country as a whole.
    The second main point is our comparatively low average income, and also that the average weekly earnings are much lower in the region than in England and Wales. The third point is the comparatively small percentage of our working population which is engaged in manufacturing industry. Manufacturing industry in the West Country accounts for only 25 per cent. of employment, compared with 38 per cent. for the country as a whole. In other words, a very much smaller proportion of our employed people are going to get the benefit of the rebate in comparison with other parts of the country. Another factor, brought out very clearly in the National Plan, is that we have one of the lowest activity rates in the country, and, therefore, a large potential reserve of labour. These are, I believe, immensely powerful factors in this case for a varying rate of tax.
    I admit—and I know that the Chief Secretary will say this—that our main problem areas in the West Country are getting valuable help under the previous development district policy now being continued under the development area policy, but, as the hon. Gentleman the
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    Member for Bodmin pointed out, this tax will work against the regional development policies.
    There are other important factors, too, which I wish to put, and the first is what one may call the magnet of Europe. The closer we get in economic and other relations with Europe—I am not arguing this case one way or the other, but am merely saying that the closer those relations become—the stronger the pressures will be for development in the eastern half of this island. Indeed, this is one of the reasons why we are angry and frustrated by the delay by the Government on a decision on the Portbury dock scheme, and why we attach immense importance to a motorway from Bristol far west into the peninsula.
    Portbury is essential to the development of Severnside, and the economic development which Portbury could create can only spill over effectively into the far west if we get better communications than we have at present. All of us in the South-West, including our economic planning council, agree that the combination of the go-ahead for the Portbury dock scheme plus the spine road into the far West Country can have the most immediate effects on the economic growth and on the development of the region as a whole.
    These two developments, one for a port and the development which would go with it and the other for a spine road, could be powerful counter-magnets to the pull of Europe and the development in the eastern counties which that will perfectly naturally and perfectly properly tend to generate. I see my hon. Friend the Member for Bury St. Edmunds (Mr. Eldon Griffiths) nodding his head. Yet on both these things, we wait. We wait for a decision on the Portbury Dock scheme, and, as for the spine road, all that we can expect under present plans is a short distance into Somerset by the early 1970s, with no specific date for the road to go further.
    There is also the significance of the discovery of natural gas in the North Sea, which is a highly welcome development from the point of view of the country as a whole. There is no doubt that that, too, will be a powerful magnet for development in the eastern half of the country, and it is another reason why a lower rate

    1459
    of Selective Employment Tax for the south-west region is one which can be justified very strongly.
    The second main point to which I want to refer is the importance of the service industries to our economy in the Southwest. Our two foremost industries are agriculture and tourism. Under the original proposals of the Government, both were to be hit; both were to pay the tax in full. Fortunately, agriculture is now in the neutral zone and will get refunds, but tourism is not.
    I was glad to know that the Chief Secretary said a few days ago in earlier discussions on the Bill that the Government were having another look at the problems of the tourist trade to see if anything could be done to relieve them. I hope very much that that will result in some change of view about the tourist trade. Unless the Government change their mind, there is no doubt that the tourist trade and the West Country will be hit very hard.
    Tourism is one of our main livelihoods. It is quite as important to us as manufacturing industry is to the Midlands; yet the prosperous Midlands will get a rebate under the tax, while the less prosperous South-West will bear the full burden of it. Indeed, there will be a double blow to our tourist trade, not only the Selective Employment Tax but also no investment grants. When one considers what roughly one-third of the population of the West Country depends upon tourism for its livelihood, one can realise what a serious situation it is from the point of view of our economy.
    The South-West is the main holiday area in these islands. We take something like 20 per cent. of those choosing holidays at home, in comparison with 14 per cent. in the case of Wales and 12 per cent. in the case of Scotland. We also attract a good many foreign tourists. The total expenditure of holiday makers from home and tourists from abroad is something like £100 million a year.
    The Chancellor has tended to answer these pleas from the regions in the past by saying, "Look what we are doing to help under our development area plans." This argument simply does not stand up to examination, certainly in the West
    1460
    Country. It is estimated that more than two-thirds of the foreign currency earned by tourism in the West Country, is earned outside the development areas, and that more than two-thirds of domestic holidays taken in the West Country are taken outside the development areas. There are four main accommodation centres for tourists in the South-West—Newquay, with one-quarter of the rooms in Cornwall; Tor Bay, with half the rooms in Devon; Weymouth, with a quarter of the rooms in Dorset; and Weston-super-Mare, with one-third of the rooms in Somerset. Only one of these, namely, Newquay, is in a development area, so I hope that if the Chief Secretary is tempted to use this argument he will bear in mind those cogent facts about the tourist industry in the West Country.
    I conclude by saying that we do not feel that we are getting a fair crack of the whip in the West Country. We do not feel that the Government are giving us a fair chance to help ourselves. We are not getting sufficiently serious attention from the Government with regard to the forces which will inevitably tend to attract development to the eastern part of the country at the expense of the west, unless counterbalancing action is taken. We resent the discrimination against our major industry, tourism, through no investment grant, and now through the Selective Employment Tax. I appeal to the Government to recognise the force of these arguments and the need to levy a lower rate of tax in the West Country and in areas similarly situated.
    Mr. Pavitt: The hon. Member for Somerset, North (Mr. Dean) has made a very good case for his area, and particularly for the tourist trade. My main concern in following the hon. Gentleman's case is whether a varying incidence of the Selective Employment Tax in different parts of the country would make the scheme so complicated that it would be difficult to work out. But it is not my job to do that. That is my right hon. Friend's job.
    I want to follow the interesting case put by the hon. Member for Bodmin (Mr. Bessell). He suggested that a special effort should be made with regard to the development areas, but at the same time

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    he recognised that by other measures, by Board of Trade grants, and so on, the Government had already taken steps in the direction that he wants to go. The hon. Gentleman seemed to be saying that this tax could be used as another weapon in the massive armoury which the Government were using to develop these areas and to ensure a more even spread not only of population but of industry.
    It seems that from the point of view of manufacturing industry these areas will be no better and no worse off than any other area of the country, and therefore there will be enough incentives in the other measures to make sure that we get more factories and more jobs and that we are able to spread them further afield. My concern is whether we can have a balanced development in the areas where there will be a massive growth of factories, new estates and new towns, designed to provide more jobs spread more evenly over the country instead of being too heavily concentrated in the South-East.
    The incidence of this tax with which I am concerned is the weighting of it in favour of the manufactured article as opposed to the services of the people who manufacture them. In the early days of the development of areas, one of the big problems was that houses were put up without adequate jobs being provided in the area, and that factories were erected without adequate social amenities and services being provided to go with them.
    3.0 a.m.
    If we are to have a massive redeployment of labour then that labour needs bread, milk, groceries, butchers and other services to cater for it. One does not want to exaggerate the importance of the incidence of the tax because the Government have a number of weapons in their armoury to deal with these kinds of problems. I should be grateful if a Treasury Minister would, whether or not this Amendment receives the support of the Government, give an assurance that we shall not, as a result of this tax, get uneven development but that as the number of jobs and the number of producers in industry increases so will be services required by the people.
    Mr. Gower: The hon. Member has referred a number of times to the
    1462
    armoury which the Government possess for bringing industry to these areas. Does' he not think that it is rather absurd that, while the Government have certain powers to take new industries to these areas, this tax and other things done by the Government are designed to inflict the utmost damage on the industries in these areas? It seems rather absurd.
    Mr. Pavitt: I cannot accept that. It is true that in some cases there could be a conflict of that kind. The hon. Member for Somerset, North instanced the tourist trade and there have been examples of hotels and we have discussed the difficulties there. This is something which affects some things harder than others and it will depend entirely on how the tax works. I am sure that the Government will be flexible in their deployment of labour and in spreading labour from the South-East, and that their plans for housing, jobs and services will be continued in an orderly manner. Even if the Selective Employment Tax does not help, I hope that the Government will have regard to the other means whereby planned development can be assured.
    Mr. Evelyn King: Any criticism which I have to offer will be directed not to a Selective Employment Tax as such but to the fact that it is not selective, or selective only to a minor degree between two particular forms of occupation.
    The seven Amendments which we are discussing are directed only to one issue and that is to try to make this rusty engine into a precision instrument. We seek to give it a pre-selector gear. The debate must range over the problem of, if we are to do this, what is the best method of doing it? That is why I interrupted the right hon. Gentleman the Member for Orkney and Shetland (Mr. Grimond). I am not quite clear whether he was suggesting that there should be a reduction in the tax in the case of development areas and that in addition the Chancellor should have the right to designate other areas, or whether these two things were alternatives. The hon. Member for Devon, North (Mr. Thorpe) did not seem able to grasp this. I was not making a general criticism of the Liberal Party, but sought only to clarify the debate.

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    We start from the point that the tax is designed, as part of its economic effects, to shift people from service industries to manufacturing industries. In development areas the tax could do this as there are manufacturing industries into which people could transfer. But I am more concerned with areas such as South Dorset in which there is no manufacturing industry to which a person can go. For this reason the tax, as it is arranged now, seems to be pointless. I should like to address my observations to the Amendment in my name which would add to line 24 of page 50 the words:
    "The Minister shall by order restrict or vary the application of this section in respect of such local government areas as he may prescribe."
    I want to turn this blunt instrument into something sharper.
    I want to indicate to right hon. and hon. Gentlemen opposite what they have done to South Dorset, and I hope they will believe that 1 am not exaggerating. Every area has certain economic bases on which it depends for its life. In South Dorset these are not hard to identify. The first is the stone industry at Portland. Next is agriculture. Next is the old and pensioned, who form a far-above-average proportion of the population. Next, are such light industries as exist.
    Every one of these economic interests has received a hammer blow from the Government at some time in the last 20 months, not, I am sure, by design but simply because of the habit of forging some control or new tax in Whitehall without thinking of the effects at the furthest end of the line of communication.
    To give one example, when the President of the Board of Trade banned office building in London which, within the context of London may, for all I know be a sensible thing to do, I wonder whether he or the Government took into account the fact that office building is the largest consumer of Portland stone and that the immediate effect was to cause unemployment in Portland. I would not make so much of the point if I thought that the Government had considered this as one of the inevitable risks of the policy and had nevertheless taken the risk. In fact, I believe that the Government did not think of it at all. I suggest that frequently in a number of controls and
    1464
    taxes which they impose they do not think of the result at the end of the lines of communication. They ignore rural and coastal England. Portland is very important to my constituency.
    The second interest is agriculture. We have had two disastrous Price Reviews and then this tax. It will have the effect at the end of harvest time of imposing upon the farmer, just when his bills are coming in, a forced loan which will be given back to him five months later. There is the hammer blow at agriculture, the second economic interest on which Dorset depends.
    The third interest is the old. I do not want to talk at length about them, because many hon. Members have done so, nor do I want to be sentimental about them, but the fact remains that proportionately they are a large section in my constituency and everyone knows that this tax will hit them. At Question Time this afternoon we heard that the addition to pensions 20 months ago is already worth 5s. less. Many of these people live in old peoples' homes, often privately run. There will be further difficulties in servicing these homes. Many pensioners are in employment, as old-age pensioners, and the prospect of their retaining their employment must be diminished.
    Light industries represent another example of Ministers not knowing what each other is doing. Poor Weymouth! It has just one sizeable factory—only one—and that is Vickers. It employs 1,000 men and in a town of 40,000 probably 3,000 to 4,000 live on it. Only a few weeks before the Chancellor imposed this tax urging that men must transfer from service industries to manufacturing industries, it was announced that the Vickers factory would close down. How do men transfer to factories which are not there? In addition, two further light engineering factories in the area are closing down. It may be claimed that this is bad luck, but on top of this we come up against the policy of the President of the Board of Trade who for some years has refused to issue i.d.c's. in respect of Weymouth and the area. Not only are there no factories to which men can go, but none is allowed to be built, and therefore the Chancellor's aim of transferring men and

    1465
    women from service industries to manufacturing industries becomes impossible of achievement. Do not the Chancellor and the President of the Board of Trade understand each other's policies?
    I have taken each one of the economic interests on which my constituency depends. Each one in turn has been picked out by the Government and has been hit. I hope that the Chief Secretary will realise that while I am sure that the Government have not deliberately picked out these interests to be hit, the fact is that they govern in the interest of London, Birmingham or other big cities and have not realised that more than half the population of the country does not live in the large cities. People who live and earn their living in the smaller areas receiving insufficient attention from the Treasury Bench.
    We come to the last industry in which my constituency is interested, for Dorset relies to a great extent on tourism. I will not deploy all the arguments again about the way in which the tourist industry is being hit, but I ask the Chief Secretary to realise that to Dorset it is our only lifeline. He has already hit all the others. There is not much liking left in Dorset for what the present Government have done. If tourism is hit there is little hope left.
    When one talks about tourism one tends to think of what is sometimes seen on television. The other week I appeared on T.V. in a programme in which we discussed the Selective Employment Tax. Preceding that programme was a film showing a luxury hotel complete with corpulent commissioner outside looking as if he received 10s. every time he opened a car door. But that is not the kind of tourist industry we have in Weymouth. The two largest hotels are most modest in size and I am more concerned with the tourist industry run by seaside landladies, and along the front is Pontin's holiday camp.
    No millionaires come to our part of the world. Most of the people who spend their holidays in Dorset are car workers from Coventry, Birmingham and Wales. The Government must realise that what they are doing by the introduction of S.E.T. is affecting the prices that are charged to those with modest incomes who come to spend their
    1466
    holidays in my part of the world. They are, therefore, harming both sides—those who take their holidays and those who provide holidays.
    Anyone with a heart beneath his ribs must feel some sorrow at the plight of seaside landladies, for whom I have great affection. These are mainly widows; often people who have endured some hardship and for whom this is the only career available. They work round the clock, running up and down stairs even when they are 60 and 70 years of age. I resent the Government making their lives even harder.
    How far is it suggested that there is hoarding of labour in this industry? I have a friend—other hon. Members probably have similar friends—who is the head waiter in one of the major hotels in my area. He has served me with meals at all hours of the day and night. He told me that in a recent week he worked 64 hours. This is not an industry which is hoarding labour. Indeed, there is a desperate shortage of staff.
    Mr. Bessell: The hon. Gentleman might care to mention that there is a shortfall in the tourist industry, in hotels, of 48,000 people at present.
    Mr. King: I was about to mention that. It is true. It is part of the Government's argument that had they not introduced S.E.T. they might have had to raise Income Tax and that would not have been popular. However, it would have been very popular indeed among the people about whom I have been speaking. I am concerned with the small hotel or boarding house which employs, perhaps, seven people. That would be an average establishment. Such an hotel would be likely to earn a profit of £1,200 to £1,300 a year. The S.E.T. will remove about £300 of that, or 25 per cent. of the profit. However, 1s. or 1s. 6d. on Income Tax—because it is charged only on the profit actually made—would have been better from their point of view. Some boarding houses of this type make hardly any profit at all. At least, with Income Tax, one pays it only on one's profit. With S.E.T. one pays it whether or not one makes a profit.
    3.15 a.m.
    Finally, I turn to the other kind of hardship. All these hotels and boarding-houses live on part-time labour. In South

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    Dorset and the West of England there is a low-wage economy. We do not suffer from much unemployment, although in South Dorset we have double the national average, but we do suffer from having a low-wage economy. To give an example which I hope will shock hon. Members in all parties, a dockyard labourer in Portland still earns under £9 a week. We heard at Question Time that the national average wage is £20 a week. That dockyard labourer finds life hard, but in summertime his wife often goes to work at the local hotel and adds considerably to the family income. Even then the family income is modest. If the effect of this tax is to remove those part-time workers—if not there seems no object in the tax—it will incite such places to operate much more through employment of students, Italians and Spaniards, and families in Dorset will suffer real hardship. These arguments apply largely to the West of England and to Scotland.
    I hope that the Chief Secretary will find time to answer these points. In Birmingham, Manchester, Leeds and Liverpool people may be attracted from the service industries to walk across the road and obtain work in a factory, but in Weymouth and South Dorset that is impossible because there is no factory for them to go to. The tax is left without a purpose in that case. That is the reason why I suggest that there is good ground for making the tax selective by way of area because it is possible to identify the sort of area I have in mind which frequently is not a development area and we can ease problems which otherwise will become increasingly harsh as years go by.
    Dr. David Owen: It is with some diffidence that I address the Committee at this late hour, but there are a number of things I wish to point out. Like my hon. Friends who have spoken in this debate I do not feel able to support this Amendment, but I feel great sympathy for the motives behind it.
    I feel that there is a need to put, not in this Bill but in the Selective Employment Payments Bill, some degree of regional flexibility. I do not believe that this Amendment is appropriate as it is framed. The only way to obtain regional flexibility is in the form of a refund. Therefore, it is to the Selective Employment Pay-
    1468
    ments Bill that those of us who wish to get some concession should direct attention. I do not think it fair to tie the Government to any exact figure at this stage. I would much prefer to extract from the Government a concession in principle for regional flexibility.
    I do not want to reiterate what I said on Second Reading of the Selective Employment Payments Bill, but the difficulty with which we have been faced in these debates has been the inevitable overlap between that Bill and the Finance Bill. This is an understandable difficulty and hon. Members opposite who complain that they have not had time to debate these issues are being given in fact two opportunities to debate them. I certainly have nothing to complain of. The Government have gone out of their way to handle the whole affair generously and fairly, and I think it is totally irresponsible to criticise them in the way that they have been criticised.
    Mr. Michael Noble: Does not the hon. Gentleman think that in making that argument, it would be a little easier for him if there were on the Government Front Bench a single Minister who had responsibility for these affairs? We have not got the First Secretary, who is the Minister responsible for regional development. We have not got—indeed, we have not had all day—one single Minister from the Scottish Office, which represents an important part of the British Isles. We have not got the Minister of Agriculture, Fisheries and Food, or the Minister of Land and Natural Resources. I know the Chief Secretary will do his best to be Poo-Bah for the whole lot, but does not the hon. Gentleman think that it is a slight affront to him and to those of us who are working at this time of night that there is not one responsible Minister on the Government Front Bench?
    The Temporary Chairman (Mr. Harold Gurden): I hope the hon. Member for Plymouth, Sutton (Dr. David Owen) will not follow up this point too much because it is not in order to discuss the Government's handling of affairs. Hon. Members should keep to the Amendment.
    Dr. Owen: Since the point has been made, I should like to answer it briefly. I am new to the House, but it has

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    always been clear to me that HANSARD is available to all Members of the Government, and that is what they read. They cannot always be here on these occasions. Anyway, I am directing my attention to the matter before the Committee, and the issue is sufficiently important for us not to waste time on these points of detail.
    We have not heard much about unemployment, and this is the most important reason for regional flexibility. We ought to analyse what is the likely effect of this tax. We all know that it is extremely difficult to forecast its exact effects. The first thing that ought to happen, and one hopes will, is that the tax should be absorbed. I believe that this is unlikely to occur, particularly in those regions of the country which have low incomes and development problems. I therefore think that they are faced largely with two options. The first option would be to keep prices steady and to throw off labour immediately. The second option is to put prices up, to wait for the cut in demand and then be forced to throw off labour. I believe that in development areas and in regions which are hard hit, in particular in the South-West, it is that first option that they would be forced to take. The danger of that first option is that we would throw off much more labour by taking this rather than the second option.
    The reason they will take the first option is that in the South-West incomes are low. We know from the survey of incomes that was carried out in 1959–60 that in the Soudi-West the average income was £690, whereas the national average for the United Kingdom was £731. Here I would remind the hon. Member for Dorset, South (Mr. Evelyn King) that the southern region average was £733. The points that the hon. Gentleman was making were largely constituency points. We must try to look upon the country and the regions as a whole.
    The hon. Gentleman also made a number of other points which were allowed by the Chair and which I feel need a reply. He said that he would be happy to have the standard rate of Income Tax increased. I have spent hours in the Committee listening to the hon. Gentleman's hon. Friends propos-
    1470
    ing that we should cut the standard rate of Income Tax, despite the fact that we face a severe economic crisis. That is irresponsible. Let us have some consistency, for goodness sake. We must analyse this situation on a regional basis and take careful note of the unemployment figures.
    In the South-West the unemployment figures vary very considerably from unemployment exchange to unemployment exchange. The hon. Member for Dorset, South drew attention to his Amendment in which he proposed that the difference should be made on local government areas. I cannot imagine any area more inappropriate because the statistics available for local government areas are worse even than for most other areas. I have made this point before. Our real need is to unify and standardise our sub-regions so that we are able to act on sufficient information which at the moment we do not have. We must have a collation of information in order to have some form of statistical analysis.
    This question of regional flexibility is one which the Government must seriously consider. Low-income areas like the South-West, where the economy is very insular, and where there are no great national companies to absorb the tax, will be forced to keep prices steady, and the tendency will be to throw off labour and thus raise unemployment in an area where unemployment is traditionally high.
    The Government have already done a great deal to lower unemployment figures, and we are very grateful for their regional policies. All I would ask the Government is to allow themselves in their other legislation, which we will be discussing again, to enshrine the principle of regional flexibility so that if unemployment does arise in these regions or sub-regions they can act swiftly without coming back to the House for further legislation to give them that power.
    Let us have that power on a very wide and permissive basis now; then I think we can welcome the Selective Employment Tax with much greater enthusiasm than we would at the present time.
    Mr. Pardoe: I should like to clear up a confusion which may have arisen in the minds of some hon. Members and which has been raised by the hon. Member for

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    Dorset, South (Mr. Evelyn King) about the two Amendments—one standing in the names of certain of my hon. Friends, and one in the names of the hon. Member for Bodmin (Mr. Bessell) and myself.
    The point about these two Amendments is that our Amendment seeks to lower the rate of Selective Employment Tax to half the proposed rate, in areas designated by the Board of Trade as development areas. The other Amendment seeks to reduce it to the nominal figure of a penny in any areas that are designated from now on by the Chancellor of the Exchequer, and this goes back to the problem of the old development districts which were smaller areas within the present development areas. There might well be a case in the future for having a lower rate of tax than the half rate we have proposed in certain areas.
    I would like to follow the hon. Member for Plymouth, Sutton (Dr. David Owen) in his remarks about the South-West. Of course the Chief Secretary will have seen the survey published in The Guardian concerning the effects in the various regions. I know that this has to a certain extent been outdated by changes the Government have made in the tax since it was originally announced, but he will have seen that the South-West comes out second highest of all the areas in relation to the incidence of this tax, it is an area that cannot stand this kind of treatment.
    I do not want at this stage to deal with the South-West as a whole. Many points have already been made about the area, and I agree with all these. The point I want to make is that, within a region, one can have areas in which the effects of this tax are hidden, and this is particularly true of Cornwall, almost the whole of which is a development area. The primary purpose of the tax, we understand, is to direct labour out of the service industries into manufacturing industries. There are various reasons why this should be done and I do not argue that it does not need to be done in certain cases. But what happens in areas where there is little manufacturing industry?
    3.30 a.m.
    In Cornwall manufacturing industry employs only 13·4 per cent. of all insured workers compared with 38·1 per cent.
    1472
    for the country as a whole. Thus, we have a substantially smaller proportion of manufacturing industry into which employees can be drafted when turned out of services. Our services, on the other hand, account for 61 per cent. of all insured workers, as opposed to 39·4 per cent. in the United Kingdom.
    Where will they go? They will cross the Tamar, as their fathers and grandfathers have been doing for a very long time. The population of Cornwall in the 1861 census was precisely what it was in the 1961 census.
    We have the problem of a low activity rate. Taking the 1961 figures, 62 per cent. of our working-age population were actually at work compared with 76 per cent. in the United Kingdom. Our problem is to encourage into work those people who are not at present working—a much higher proper proportion of the population than elsewhere in the United Kingdom. Our local authorities undertake surveys to try to establish how many people there are who would work if industry were brought to the area. Our problem is not to discourage employment, which is the aim of this tax, but to encourage it.
    We have the problem of slow growth of employment in Cornwall compared with the South-West as a whole. In the period 1952–63 the number of insured employees rose in Cornwall by 8 per cent. compared with 14 per cent. in the south-western region. Again we see that within the South-West as a whole there can be smaller areas which are worse off. The level of employment in manufacturing industry reveals this even more clearly. Between 1953 and 1963, employment in Cornish manufacturing industry fell by 15 per cent. whereas in the whole of the South-West it rose by 15 per cent.
    We have considerable problems with seasonal unemployment. These will not be helped by the tax because most of the seasonal unemployment is brought about as a result of our dependence on the tourist trade. Between January and July, it is quite common for unemployment in Cornwall to fall from 6½ to less than 2 per cent. This differs entirely from the rest of the South-West or the United Kingdom. Average unemployment in Cornwall throughout the year is two or three times what it is in the rest of the south-western region.

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    >As the hon. Member for Plymouth, Sutton pointed out, we have substantially lower incomes in the South-West than elsewhere.
    Mr. Robert Cooke: Reverting to what the hon. Gentleman said about unemployment in the summer being so different from what it is in the winter, how would he deal with the consequential problem there? If those people were brought. into industrial employment in the winter, how would he hold them during the summer?
    Mr. Pardoe: I do not think that that has anything to do with the Amendment. Neither the Selective Employment Tax nor the abandonment of it can entirely cure that problem. It is, however, a point, and it leads to the very substantial average level of unemployment in the area.
    The hon. Member for Plymouth, Sutton said that in the South-West we have substantially lower incomes than elsewhere. This is of immense importance in viewing the tax. Earlier today I said that I supposed it was a principle of Socialism in taxation that one should levy from those with the ability to pay. This applies to regions. But the trouble is that the tax will be a very much higher proportion of wage and salary payments in the South-West than in the rest of the country. I follow that argument about the South-West by pointing out that employment incomes in Cornwall averaged £530 per head per annum this year compared with £645 for the United Kingdom. So they are even lower than the figures for the South-West quoted earlier.
    On an earlier Clause the Chancellor told us that it was nonsense to suppose that the investment grants had been entirely cancelled out in their effect on areas like Cornwall and the South-West by such proposals as this. I am not convinced by that argument. I fear that it will be the argument put forward by the Chief Secretary to this Amendment. Of course the grants are very welcome, but the effect of the tax, with certain other Government measures recently announced, will be largely to cancel out the very beneficial effects of the investment grants.
    I want to show the Chief Secretary how I reach that point. The construction industry is extremely important, particularly in Cornwall, and it employs
    1474
    a much higher proportion of the insured population there than in the rest of the country. But in Cornwall the industry depends very heavily on two factors. One is additions and new building for the tourist industry, and the second is new buildings for housing. We do not have much industrial building. We have no investment grants for the tourist industry, and we now have this heavy tax on top, and so it is unlikely that we shall see any vast expansion in building for the purposes of the tourist trade.
    We have also just had a circular from the Ministry of Housing and Local Government telling us that almost none of the houses we want to build in Newquay, say, will in future qualify for loan sanction. So we are hitting the construction industry at both ends. Newquay is a major tourist area. The growth in the number of insured employees in the tourist industry there between 1955 and 1963 was 55 per cent. This is a growth industry if ever there was one. We have the finest beaches in Europe. If we want growth—presumably growth industries is what we are looking for—here we have an instance of a 55 per cent. increase in the insured employees in one industry in one town. Yet the Government now say that the building industry is not allowed to provide new houses for them. So there is an interaction here between the tax and all sorts of other measures announced recently by the Government.
    I feel that the Government's main point for not doing anything about the Amendment will be that it would be administratively difficult. No doubt the Chief Secretary will put his hand on his heart and say that the Government would love to do something for areas such as Cornwall and that their hearts bleed for them but that it is administratively impossible. I can suggest a way in which it could be simply done by means of the National Insurance stamp. We could quite well have a different value stamp issued through the post offices in Cornwall for all the industries there. It would at least get the Cornish stamp that my hon. Friend the Member for Bodmin has been campaigning for.
    I do not accept that any Government are entitled to bring in such a tax and say, "We cannot do anything to make

    1475
    it less onerous in certain areas because we do not have the tools to hand." Government is not the art of the possible but the art of making possible. If a Government find that they have not the tools to hand, that the administrative system will not cope with what they want to do, then it is their duty to alter the administrative system.
    It is precisely the same with the House of Commons. If the Government find they cannot get legislation through and that a large amount of time is wasted, then let them reform the place. That is what radicalism is about.
    Mr. William Hamilton: I cannot complain about the tenor of the debate up to now. There has been a great deal of special pleading of one kind or another, and one cannot object to that either. We have heard arguments in favour of differentiating for development areas and development districts and of other communities which are neither of these two, arguments for the latter coming from the hon. Member for Dorset, South (Mr. Evelyn King). This is precisely the sort of argument, however, which leads to the colossal difficulties to which the hon. Member for Cornwall, North (Mr. Pardoe) referred.
    The initial purpose of the tax was not primarily as an instrument for regional development or even to transfer labour from services to manufacturing. The primary purpose was to raise cash, about £240 million a year, and it was important to raise it fairly quickly and to make sure that everyone knew who would pay and how much.
    This led to many rough edges—one cannot deny that. But when debating the Amendment and the desirability of regional differentiation, I hope that the Tory and Liberal Parties are now saying that they are committed to fiscal differentiation on a regional basis. We should be glad of such an assurance. I hope that the Conservative Party is committed to fiscal differentiation in favour of areas like Scotland, the North-East, the North-West, South Wales and the South-West. If they are, we are glad to know it because we shall know what to do in the next four or five years.
    Mr. Bruce-Gardyne: If the hon. Gentleman does not think that the Con-
    1476
    servative Party was committed to fiscal discrimination, what does he think the system of free depreciation introduced by my right hon. Friend the Member for Barnet (Mr. Maudling) in favour of development districts was?
    Mr. Hamilton: The answer to that was in the results in Scotland in the last two General Elections. The Tory Party was given a kick in the pants in 1964 and a worse kick in 1966 precisely because it did not differentiate in favour of these areas.
    It is no good debating these matters in a vacuum without regard to what the Government have been doing about regional development of one kind or another, both financially and physically, through positive incentives to go to areas like Scotland and through negative disincentives to discourage further development in areas like the Midlands and the South-East.
    3.45 a.m.
    I will concede that it is difficult to argue against the proposition that the effects of the Selective Employment Tax will retard regional development, to which the Government are committed. I hope that when my right hon. Friend winds up the debate he is going to say that the total cost to the development areas will be reimbursed in some other way. It is important that this should be used as an additional weapon in the armoury of regional development. If this is said, then it is a very powerful instrument and an extremely flexible one.
    One can change the incidence of it as between one industry and another, almost between one factory and another, and certainly between the sexes if need be. There is an infinite variety of ways in which this tax can be used. If my hon. Friend is going to make this kind of noise no one would be more delighted than I. I come from an area, as does almost every hon. Member who has spoken, which is crying out for this kind of discrimination. I have already tabled Amendments, which would have the effect of discriminating between these and other areas, to the Bill which is in the hands of the Minister of Labour.
    I want the premium paid only to industrialists in development areas and not to industrialists in the South-East and Midlands. If we can use the premiums

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    as well as the tax payments, in favour of the kind of regional discrimination that I have in mind, then we on this side of the Committee will be well pleased.
    Mr. Jopling: I cannot quite understand why the Government have tried to pursue a policy of regional development, with the establishment of regional economic planning boards and councils and so on, and why, at the same time, they are anxious to bring in a tax of this sort. I agree with the hon. Gentleman the Member for Fife, West (Mr. William Hamilton) that the effect of this tax, without any question, will be against the aims of regional development.
    Here are the Government—who came in with such a shout, setting up the regional economic planning councils, now proposing to set up rural development boards, with a whole plethora of organisations supposed to help the development areas and those areas which have not been getting along quite as fast as the South-East—producing this iniquitous tax. It is quite illogical. I hope that when the Chief Secretary replies to the debate he will tell us where regional development stands if he cannot accept this Amendment.
    I very much prefer the Amendment in the name of my hon. Friend the Member for Somerset, North (Mr. Dean). One should give the Government a greater degree of flexibility so that they could help these areas where help is most needed. This tax is going to bear very hard indeed, particularly upon the rural areas within development areas. It will hit the tourist industry harder than other industries. Perhaps I could tell of my own experience this weekend, in my own constituency, in the Lake District. I found that it is the shortage of staff in the hotel industry which is causing the greatest problems.
    On Saturday I was most impressed when I met a small group of hoteliers in my constituency in the southern part of the Lake District. They were proprietors, not of the Grand Excelsior type of hotel, but of medium-sized hotels who were doing their job to the best of their ability. They were hampered partly because of a short season, which many parts of this country have, particularly those parts in the development districts, like the Lake District and the Highlands,
    1478
    but also by the difficulty of getting staff. One of the people whom I met told me that within the last month or so he had had to close his restaurant because he could not get staff. He found it uneconomic to pay the wages which were necessary to attract people to staff his restaurant.
    Another person in the group told me that, because of the shortage of staff, he was seriously contemplating closing his restaurant and converting his hotel—a very attractive, medium hotel in Bowness on Windermere, which I am sure many hon. Members know—into a glorified snack bar to attract day trippers. I hope that this is a trend of which the Government would be very wary.
    On Saturday, when I was in Langdale, in part of my constituency, I talked to a hotel owner who told me about the problems of part-time staff caused by the Selective Employment Tax. He said that he would have to employ fewer part-time workers, particularly women, who work a few hours a week. He wondered where the Government expected these people to work. The only employment in Langdale apart from tourism and agriculture is in the quarries. I do not know whether the Government expect ladies who work part-time as waitresses, and so on, in the hotels to work in the quarries.
    My constituency is in a development district where there is a very low level of manufacturing industry. It is predominantly a scattered rural area. The tax will have a harmful effect on depopulation in my constituency. In the north of Westmorland, in particular, depopulation is a very serious problem. It is essential to keep the countryside prosperous and populated. We must have an agriculture policy which enables the farming industry to be kept at a high level of prosperity. We have had two scandalous Price Reviews—one which was not agreed with the N.F.U., and the other which was agreed only because, as the N.F.U. said, of the grave national economic crisis with which we were faced. The agricultural industry is being faced with the new imposition of having to lend money to the Government interest free.
    This tax will bear harshly not only on agriculture but on the economy of the small market towns which are the hub and nucleus of rural and country life.

    1479
    The small shopkeepers and professional people in these market towns will be very sorely hit by the tax.
    I began by saying that I did not understand what the Government were up to. These policies are completely contradictory to the setting up of all these grandiose committees and councils. I spent part of Friday afternoon in Newcastle listening to a great harangue by the Chairman of the Northern Economic Planning Council. We were told of all the things which would be done. None of them seems to get done.
    We are also faced with the prospect of setting up the rural development boards through the Agriculture Bill, with wide powers to help the rural upland areas, yet here we have this tax which is completely contradictory. It seems to me that the two are almost on a collision course. It is like the Government making a rowing boat with half the seats facing forward and half facing backwards, with one rower pulling to go forward and the other to go backwards. The Selective Employment Tax and regional development seem to be working in exactly this way.
    The longer the Government stay in office, the more seats they put into the boat, so that the greater is the clash of pulling against each other. This is just another part of the Socialist Party's well-known love of bureaucracy and love of the State. I hope that we shall put a stop to all this opposing trend which is so deplorable.
    Mr. Eric Ogden: The Committee will, no doubt, forgive me if I make my remarks brief and confine them particularly to Amendment No. 339, which, on the face of it, makes the most radical proposal which has come from the Liberal Party in either the present Parliament or the last. I shall endeavour to ascertain whether they appreciate the importance of that Amendment and the principles behind it.
    If the Liberal Party are suggesting that the tax in certain areas should be half of what it is in other areas, and the purpose of the tax, as the Government Front Bench have reminded us, is to raise taxation, do Liberal Members also agree that the revenue which would be lost under the Amendment would have to be raised
    1480
    under a subsequent Amendment? That is implicit in the argument which has been made. If we are to raise £240 million net but we reduce it from certain areas and certain industry, would the Liberal Party agree to adding whatever the deficit might be to the overall rate of tax or to the tax on the other areas?
    Mr. Thorpe: I accept that there would be a shortfall on tax. We would cut a considerable amount east of Suez.
    Mr. Ogden: That is as good a way as any of avoiding a straight answer to a straight question.
    Various arguments have come from the benches opposite, even from the hon. Member for Dorset, South (Mr. Evelyn King), who now says that he is in favour of increased Income Tax, which he voted against on a number of occasions in the last Parliament. The hon. Member has argued for a specific local government area, others have argued for a development area and yet others have argued for regions as large as Scotland. In fact, development areas are now more than half the gross geographical area of these islands.
    Even allowing all those areas, does the hon. Member accept that there is the objection in principle that hitherto taxation has always been on the same basis for everyone? [HON. MEMBERS: "No."] I said that I would try to be brief. The same rate of tax applies to everyone, wherever he lives or whatever he does. The tax on income is the same wherever a person lives. Similarly, the same taxation rates apply for industry in any area, whether in Scotland or in the South-West. It is only the benefits and allowances that change for particular individuals or industries, according to their circumstances. The tax is at the same level for individuals or for industry.
    If the principle of the Clause is accepted by the Committee, I think that it would be argued from the Liberal benches that the principle should be carried further and that if industry is established in a certain area, it should be entitled to reduced rates of taxation in that part of the country. All I am trying to find out is whether they are going to try to carry this kind of principle through to its logical conclusion in all the other aspects.
    4.0 a.m.
    Mr. Peter Mills: I rise to support Amendment No. 211, which is the one which would provide for varying rates of tax in different parts of the country. I think it is important to look at the history of the south-west region, and even though it is a very late hour I think it is important still to go into these matters very thoroughly, and I hope that this debate will go on for a long time, so that we really get to the bottom of this very difficult problem.
    In looking into the problems of the south-west region and the background to them we must remember that tin mining, agriculture, horticulture, forestry, the holiday industry, the clay and stone industries, and fishing have been the backbone of our enterprise; they have been our main industries for a very long time. Some are beginning to fade away, and new ones take their places. It is true, as has been said tonight, that the standard of living and wages have been lower there than in many other regions.
    However, change is on the way, and I think that that is true for two reasons. Some people will, of course, not agree with the reasons I am going to put, but I think that the first reason is the gradual awakening by the people themselves. They see the need for change, the need for a much higher standard of living and wages. Those measures which were begun by a Conservative Government will be the foundation for these improvements—the development districts, and so on, which they started. Those of us who have experience of them know that that is true. Vigorous representation has been made in this Chamber, so that progress is being made. Of course, there is much more which should and can be done, but I wonder, when we have a tax like this, whether it is really the aim of this Government to have this progress, and I wonder whether they really want it, particularly in some of the regions.
    What will be the effect of this tax on the South-West? Of course the arguments I bring forward are applicable to many other regions as well, but I want to confine my remarks to the South-West. Its effect, before the announcement of the concession as it applies to agriculture, horticulture, forestry, and the clay and quarrying industries, could be described as disastrous. I think that is
    1482
    true. If we had not had this concession, it would have been disastrous to the South-West, but, fortunately, reason has prevailed. I only wonder why this was not thought out carefully before. Indeed, even having this concession, I think it is true to say that the effect of the tax will be that much of the progress which has been made will be undone. I believe that S.E.T. will cause unemployment in the South-West. As the hon. Member for Plymouth, Sutton (Dr. David Owen) mentioned, there is a very real danger that we shall have increased unemployment.
    Very great strides have been made in my own constituency to overcome this problem of unemployment, but I should like to quote the unemployment figures. At 13th June, 1966, there was a total of 189. At 14th June, 1965, there were 203. In a year, a difference of 13 or 14. This shows how very difficult it is to get the unemployment figures down, in spite of all that has been done, in a development area. Therefore, if a tax like S.E.T. comes upon the scene the danger of further unemployment, I believe, is very great. It has been the desire of many of us in the South-West to mop up these pockets of unemployment. Pockets have been reduced, to the benefit of all.
    It has already been mentioned by one or two hon. Members that the drift away from certain areas has been curtailed. That is very important, because in some areas the drift is as high as 10 per cent. Under the Selective Employment Tax, the figures will creep up again, particularly among seasonal workers and the elderly who are employed in some of our light industries. That the elderly should play their part is a very good idea and something which should be encouraged, particularly if suitable jobs can be found for them.
    Then we shall find that there is severe pruning of shop assistants and all those concerned in the service industries. Some would say that that is just what is wanted, and that the tax is doing its job. But is it? I do not think so. Where can these people turn, particularly in an area such as that which I represent? It is quite different from the great conurbations, where a person can get another job quite easily. That is not so in the South-West.

    1483
    I believe that there is a special case, obvious to us all, for a variation of the tax in certain regions. However, I do not say that any reduction for the Southwest should be permanent. If we have to accept the Selective Employment Tax, and I suppose that that is inevitable with a Government having such a large majority, it could be placed on the shoulders of development areas provided that a special concession was made until an area became viable. Such a concession is most important until alternative work for people displaced by the tax is found. At that time, we shall be able to bear our responsibilities with the other regions.
    My plea is for a temporary variation, so that progress in building up the economic viability of the region can continue. When that is done, we can bear the tax. That is not to say that it will be accepted, but we shall be able to bear it. I believe that we can and must raise the general standard in the South-West and the other poorer regions, and that time and help must be given before the full impact of the tax can be borne. Surely that is sensible and feasible. It is the whole idea of such a tax.
    I want now to quote some words of Professor Tress. Some hon. Members have had the pleasure of meeting him recently; I understand that hon. Members on the Liberal benches have met him. For those who do not know, he is Chairman of the South-West Economic Planning Council, and he has this to say about the region:
    "In the south-western half of the Region, agriculture and tourism, the latter embracing retirement, are currently the two most important sources of income, directly and through the ancillary activities which they generate … Nevertheless, these activities form an inadequate base for self-perpetuating communities having contemporary standards of economic and social provision unless there are added complementary employments yielding a range of skills and opportunities."
    He says much more. He goes on to say that the rest of the area presents various kinds of serious problems.
    He knows that there are these problems in the South-West, and I do not believe that the Selective Employment Tax will help the work that he is trying to do. So I make a very strong plea for varying rates. I ask the Minister
    1484
    to look at the matter again, and I ask him to give our Amendment further close consideration.
    One last point which I should like to make is that it is worth looking at what happens in other countries. In Australia there is a payroll tax, though it is less comprehensive than is proposed in the Bill. It is more limited in its scope. It has an exemption for farmers, for charities, and for small business people. This is very important. Small and growing businesses are not affected. This is a point which the Minister should consider. Australia is a vigorous country, and we have much to learn from her. Let us hope that this Socialist Government will learn that small and growing businesses are not affected by this sort of tax. I make a strong plea this morning for the South-West, and I remind the right hon. Gentleman that there are these varying forms of tax.
    Mr. Diamond: We have had a long and very interesting debate on a matter which is naturally of considerable interest both to the Committee as a whole and to many hon. Members who have constituency interests which are close to their hearts, and indeed the heart of everybody in the Committee.
    The hon. Member for Bodmin (Mr. Bessell) who opened this debate said that he was making a plea for the development areas. I can tell the hon. Gentleman that he is pushing at a wide open door. It is the Government's intention to continue their policy of helping the development areas in every conceivable way, and, as I shall show shortly, this policy has achieved considerable success.
    Before I come to the detail of what the Government are doing for development areas, may I say how much I welcome the consensus of opinion on both sides of the Committee that what is good about this tax is its selectivity, and that if there is any complaint to be made it is that it is not selective enough. I think that this is a most welcome consensus, because up to this point the general argument has been that although there are many hon. Gentlemen opposite—and indeed the Liberals in particular said this—who are in favour of a non-Selective Employment Tax, a straight payroll tax, some of them are anxious about the selectivity.

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    We now know that they are anxious to have at least as much selectivity as we want, and indeed a good deal more. They want selectivity applied to development areas, in other cases to areas which are not development areas, in other cases to local government areas, to areas within development areas, to small pockets within development areas, and indeed there is nothing in the structure of this tax which could not enable it to be used in a selective way in the course of time, nothing at all.
    As my hon. Friend the Member for Fife, West (Mr. William Hamilton) wisely pointed out, it is necessary to have regard to the purpose of the tax, to the need for the tax, and in particular to the need for getting a new tax into existence, to get it floated. It is very important to have regard to that, but there is nothing in the structure of the tax which in the course of time will prevent it from being used in a more refined way, in a more selective way—which inevitably means more costs in administration, but there is nothing which will prevent it from being used in a more selective way, and indeed to correspond with what some hon. Gentlemen have been asking with regard to selectivity in relation to development areas.
    The Government are not proposing to do that because they do not feel that there is any need as yet. Let me tell the Committee why we do not feel that it is necessary to go that far yet, and why we would prefer to keep an open mind on this. We feel we must look at the development of the tax in its effects upon the different regions of the country, bearing in mind that development areas are by no means exclusively service areas and that many of the largest factories in the country are situated in the development areas.
    4.15 a.m.
    It has been alleged—I am not controverting this because I do not know the source of the figures—that there are more service employees in the development areas than there are factory employees. This may be so. The point I am making is that there is no great difference between the proportion in the development areas and the proportion in certain other areas. Birmingham and the Midlands are highly concentrated areas of factory development, but in other areas
    1486
    of the country the difference is quite considerable.
    What I want to impress on the Committee is not the unwillingness of the Government to look at this but the present unwillingness of the Government to sacrifice the possibility of starting a good tax by trying to over-refine it in the early stages. The need is to look at it and have regard to the totality of the things which the Government are doing in order to help the development areas.
    I can give a short list—I do not want to be long; the debate has gone on for a long time—[HON. MEMBERS: "There is plenty of time."]—of what the Government are doing in order to help the development areas. I will start with some of the minor things which together have a cumulative effect.
    We have the control of office development, which has a beneficial effect in the development areas. We have the extension of control by industrial development certificates. We have the new programmes of advanced factories. We have preferential access to the Public Works Loans Board for certain local authorities. We have made a request to the banks to pay regard to regional policy. We have exempted development districts from the deferment of capital projects and building controls and we have loans and building grants which will continue to be available for new hotels and other employment-creating institutions in the tourist trade. We have the new 40 per cent. investment grant introduced in the Industrial Development Bill which is still a Bill and the effects of which have not yet been felt. It is a most important Bill and the Second Reading was as recent as 16th May. There has been nothing like time for the Bill even to become law, still less for its effects to be felt.
    I remind the Committee of some of the things which the President of the Board of Trade drew attention to when he was moving the Second Reading of the Bill. He said:
    "the Bill substantially improves a number of other services to industry in the development areas. We shall be able to make building grants of 25 per cent. for new projects in development as now, but shall also be able to increase these to 35 per cent. where the project is in a substantial sense 'new' to the area."

    1487
    He continued:
    "where the factory is not privately financed but is Board of Trade-owned, equivalent help will be given in the form of a two year rent-free period. That is a new power.
    "The Bill also removes the bar which has prevented a building grant being given in the case of a capital intensive scheme; where instead of scaling it down, we were compelled to give no help at all because of the so called "cost per job" rule. The Bill will enable us to give a scaled-down grant in such cases—for instance, a new petrochemical plant in a development area.
    "All these building grants, including the improvements, will also, of course, be available not just to manufacturing industry but to service trades also in development areas, including offices, hotels and the tourist trade generally, provided only that they contribute to the employment in the area. This applies to all the services offered in the Bill by way of building grants, and general loans and grants; and this will be of great value to the tourist trade and the growth of non-industrial employment in these areas."
    He went on to refer to the 40 per cent. grants and said:
    "The new grant will no longer depend, as did the old, on whether or not the investment provides new employment. There is no doubt, therefore, that the new 40 per cent. development area grant will cover a much broader area of plant and machinery, as well as wider geographical areas than the old grants; and will be a powerful stimulus to development in the parts of the country where they apply."—[OFFICIAL REPORT, 16th May, 1966: Vol. 728, c. 945–6.]
    It is appropriate to remind the Committee of the tremendous advances represented by that Bill. It is impossible to say at this stage that the powers given in that Bill will not encourage development in the development areas, not only of services but of new industries sufficient to provide what we all want to provide—increasing employment in these areas.
    Mr. Gordon Campbell: I hope to have an opportunity later to go into all the points which the right hon. Member has made, but may I ask whether the control of office development has provided any extra jobs in the Highlands yet?
    Mr. Diamond: I am talking of the totality of these policies. I cannot pinpoint a particular case in which we can say, "As a result of this there is extra work in the Highlands". The Highlands are not the only areas with which we are concerned. I am dealing with the generality of the case and I think that I
    1488
    have succeeded in putting to the Committee the great variety of actions taken by the Government which will undoubtedly have the effect of improving employment conditions in these areas and encouraging the economy of these areas.
    Not only will our new policies greatly assist but existing policies, too, have had their effect. During 1965, Scotland, Wales, the North and the North-West together got 50 per cent of the new factory approvals in square feet compared with 40 per cent as an average over the previous four years—a 25 per cent increase. That is 50 per cent of new factory approvals in an area with only one-third of the country's population. I am glad to say that Board of Trade officials report growing interest in factory development in development districts in the most recent period, particularly in Wales.
    Mr. Eldon Griffiths: I appreciate the long list of policies which the right hon. Gentleman has given. Does he feel that these policies have achieved anything in the great area of East Anglia? We have heard, and are glad to have heard, a great deal about the South-West, but the whole area of East Anglia has not yet been mentioned. Will he draw that to the attention of the Patronage Secretary?
    Mr. Diamond: I recognise that the hon. Member has not had an opportunity to represent his constituency interest in East Anglia. We have heard a great deal about the South-West and nothing about East Anglia. There are other areas.
    Mr. Robert Cooke Mr. Robert Cooke rose——
    Mr. Diamond: I will not give way again. The South-West has had the best possible speeches delivered in a most persuasive way and the hon. Member can relax. When the Committee is good enough to permit Ministers to reply, it is convenient to the Committee for Ministers to explain Government proposals and to answer the debate. I have given a long list of the actions which we have taken and are taking and of the results which we have achieved and can reasonably hope to achieve, all of which add up to a vast improvement in these areas. We are most sympathetic towards encouraging the growth of these areas. I would add further that there is nothing in the structure of the tax which would prevent us from applying it in a selective way in the regions. This is one of

    1489
    its advantages, and I am glad that the whole Committee has been persuaded of the advantage of the principle of selectivity being added to the flat-rate principle of a payroll tax. This is indeed encouraging.
    Hon. Members who have insisted that the one and only purpose of this tax is to divert employment from services into industry should remember that this is by no means the case. The main purpose of this tax is to raise revenue. Any hon. Gentleman opposite who is judging the effects of this tax is not doing justice to his own powers of reasoning and comparison if he leaves out of account the alternative revenue which would have had to be raised. The hon. Member for Dorset, South (Mr. Evelyn King) solved the problem to his own satisfaction—I hope to the satisfaction of his Front Bench also—because he wanted an increase in the standard rate of Income Tax. I have understood that that was not the official policy of the Opposition, but I hope that it will shortly become so.
    Mr. Evelyn King: I did not say anything of the kind. I said that there were hotel keepers making moderate profits of, perhaps, £1,200 a year and that, in their case, 1s. on Income Tax would have been much more profitable to them than their having to spend £300 a year on S.E.T. That is quite a different matter.
    Mr. Diamond: The hon. Gentleman should not try to run away. I heard exactly what he said. I do not agree that he did not say anything of the kind. I noted his words and he will see them in to-morrow's OFFICIAL REPORT. I do not know why he is trying to run away. He has a habit of running away. He said that he would settle for an increase in the standard rate of Income Tax. He is now trying to say that he has changed his mind.
    Mr. Evelyn King: The right hon. Gentleman really must not deliberately misquote me. I have told the right hon. Gentleman what I said. I know precisely what I said. [Interruption.] If he reads the report of what I said in tomorrow's HANSARD he will see that, unlike some of his right hon. Friends, I have not faked what I said. What the right hon. Gentleman said is entirely untrue.
    Mr. Diamond: I assure the hon. Gentleman that my sincere recollection is that he said that he would settle for such an increase, and if he says that he did not use those words I can only assume that I am wrong in my recollection. The short point I was trying to make was simply that one must take into account, first, the fact that the main purpose of the tax is to raise revenue and that a judgment can be made of the proposals we are putting forward only if some alternative source of revenue is borne in mind. Secondly, a further purpose of the Bill is to go some way towards righting the distortion which already exists as a result of previous legislation in the fiscal sphere. At present, as we have already explained, taxes on commodities are something like 40 to 1 in relation to taxes on services. If one leaves out the doubtful commodities like tobacco and drink one gets to a figure of 15 to 1. If this revenue had been raised in the normal way, by increasing some of these taxes, one would have had a higher figure than 40 to 1 or 15 to 1. We are going some way to righting the distortion which already exists.
    It is no use hon. Gentlemen opposite thinking that the present situation is perfect and ideal and that everything we are doing is going away from that situation. If any hon. Gentleman opposite considers that his constituents might be to some degree prejudiced by this tax, then he has not completed the argument and reasoning until he considers to what extent the same constituents might have been prejudiced by action in other forms of tax which might have been taken.
    4.30 a.m.
    Mr. Stanley R. McMaster: The right hon. Gentleman keeps repeating that the purpose of the tax is to raise revenue. Will he tell the Committee what the Government intend to do with the revenue? Do they intend to spend it or to use it to discharge Government debt? What is the purpose?
    Mr. Diamond: I would not dream of responding to a request like that. The hon. Member will find it all in the Budget statement. I thought he was present during the Budget speech. He will

    1491
    find it reported, and accurately reported, in HANSARD.
    I do not want to make too much of the technical point that what I am asked by a number of hon. Members to do does not come under this Bill but under the Selective Employment Payments Bill, as my hon. Friend the Member for Plymouth, Sutton (Dr. David Owen) recognised. After two and a half hours, or two hours and three quarters——
    Mr. Iain Macleod: Two hours and 25 minutes.
    Mr. Diamond: I am grateful to the right hon. Gentleman—two hours and 25 minutes, nearly two and a half hours' discussion, we look forward to hearing the reply of the Front Bench opposite to our proposals. After that I hope that we can come to a conclusion.
    The Chairman: Mr. Jenkin.
    Mr. Patrick Jenkin rose ——
    Mr. Robert Cooke: Before the right hon. Gentleman sits down——
    The Chairman: Order. I called Mr. Jenkin.
    Mr. Jenkin: I rise to speak at this point in the debate, but I wish to make clear that as there are a number of my hon. and right hon. Friends who wish to join in the debate, and also a number of members of the Liberal Party—whose Amendment this is, to which I have appended my name—who also wish to speak, I hope that the debate will not be curtailed. We have had no one yet speaking for the North-East, we have had no one from Merseyside, no one from Wales, and none of my hon. Friends from Scotland has yet spoken. It would be absolutely intolerable if at this stage the Government saw fit to move the Closure and to curtail the debate.
    It is perfectly obvious why two hours and 25 minutes ago we started on this debate and why the Government were insistent on closuring the earlier debate. No one who has listened, as I have, to speeches by hon. Members of all three parties can fail to have recognised the strength of the case which has been
    1492
    made for regional treatment of this tax. Everyone who heard the reply by the Chief Secretary must have been convinced that the Government are on a very poor wicket in this matter. Apart from a very few minutes the First Secretary of State and Secretary of State for Economic Affairs—whom we are glad to welcome back; regional policy is his particular baby—did not stay to listen to points made. I wish that he could have heard the strong arguments from all parts of the Committee on this question.
    Of all Ministers who have an interest in that policy, the Joint Parliamentary Secretary to the Ministry of Pensions and National Insurance has the least, but he has been here the whole time. It may interest the Committee to know that I shared a platform with him during the General Election. I was not able to speak there. I wonder what his audience would have said if he had told them that the Government were to introduce a new tax which would make no provision whatever for any regional plans or regional weighting.
    May I say a word about the various Liberal Amendments, which, despite what the hon. Member for Cornwall, North (Mr. Pardoe) said, do not appear to be consistent with each other? After he offered an explanation to my hon. Friend the Member for Dorset, South (Mr. Evelyn King), who asked which Amendment was Liberal policy, his answer was as clear as mud. I have appended my name to the Amendment which we are debating. On that we shall hope to divide with the Liberals against the Government.
    Mr. Lubbock: Does this Amendment represent Conservative Policy?
    Mr. Jenkin: If the hon. Gentleman will be prepared to wait, he will hear.
    The one point that has shone through the debate from all quarters of the Committee is the manifest and illogical conflict in policy which the whole tax represents. This was made clear in the first speech by the hon. Member for Bodmin (Mr. Bessell). He was followed by the hon. Members for Willesden, West (Mr. Pavitt), for Plymouth, Sutton (Dr. David Owen) who pleaded for a regional balance in these matters, and the hon. Member for Fife, West (Mr. William Hamilton)

    1493
    who is in a somewhat unusual place in the Committee, and this point was echoed by many hon. Members on this side of the Committee.
    This tax is manifest nonsense. The Chancellor's excuse that we were offered the other night on the Selective Employment Payments Bill was echoed tonight by the Chief Secretary with a long tally of all the measures which the Government are taking, as if that were an excuse for the inconsistency of their failure to take the proper measures in this case. If ever there were an instrument which could be used as a valid tool to strengthen and enforce a regional policy, it is a tax that is based upon the place at which a man is employed. I shall return to this point later.
    One of the matters in which the Government have the greatest pride—although if they had sat, as I have, three mornings a week, listening to the debate on the Industrial Development Bill, perhaps that pride would be somewhat less—is the new system of investment grants. This is designed to replace the system which was introduced, as the hon. Member for South Angus (Mr. Bruce-Gardyne) pointed out, of the investment allowances on a regional basis, the free depreciation, introduced by my right hon. Friend the Member for Barnet (Mr. Maudling) in 1963. Thus we have this situation, that where the Government are following and to a large extent imitating their predecessors, as with the industrial grants, they introduce and maintain a regional bias, a regional bent. Where they are introducing a new tax, where they are not following their predecessors, no regional bent is introduced.
    It might be asked—indeed, it has been asked—why should we place all this importance on the regions, bearing in mind what has been done? Indeed, it was suggested in an earlier debate that the problems of the regions were being greatly exaggerated. I do not think anybody who has listened to this debate could possibly still adhere to that view. It is perfectly clear that the housing problem, the cost of building problem, in the regions is very much more serious than it is in the South-East and in the Midlands. The cost of building a house or a factory is much higher in Scotland and in the South-West than it is anywhere else.
    1494
    My hon. Friend the Member for Dorset, South made the point about part-time employees. If part-time employees are dismissed in, let us say, London, the chances are that they may well find other employment. The pressure here is such that their services will be in demand. But if part-time employees are dismissed as a result of the Selective Employment Tax in the under-developed regions, there is nowhere for them to go. Over and over again, we were told that there are no industries or factories into which people can go if they move from the services.
    Again, there is the position of tourism which affects particularly many of the outlying regions. The tourist industry, of course, has been particularly hard hit, partly by building controls, certainly by the withdrawal of the investment allowances, and now by the Selective Employment Tax. Exactly the same can be said with regard to the elderly and the handicapped and those others who will be placed in a very difficult position under this Bill. All these problems are accentuated and made more difficult in the regions, and this is one of the arguments, and a powerful argument, why there should be a regional balance in this tax.
    We had the very powerful plea made by the right hon. Gentleman the Member for Orkney and Shetland (Mr. Grimond) with reference to the strike and to the acute dislocation, particularly in the islands, that will be created by the strike even if this should be settled fairly soon. And, just at the time when the shipping can be expected to be getting back into schedule—though long after the bulk of the holiday season will have gone past—this new tax will come as an additional impost to make life for the people in these areas all the more difficult.
    Then there is this nonsensical distinction between services and manufacture. The hon. Member for Willesden, West could not have put it better when he said it is no use trying to attract manufacturing industry to a development area where there is high unemployment, because all the people who are going to work there and all the development that is going to come will need services which are part and parcel of a civilised community. To try to draw the distinction between manufacturing and services, to say one is good and one is bad, one can

    1495
    get the premium and the other cannot, if it is nonsense in the country as a whole is more particularly nonsense in a development area. This shows the Government's case as the transparent nonsense that it is.
    The Chief Secretary went on record, and he attacked one of my hon. Friends who said this tax was regressive, as saying that this is a progressive tax, and he actually took this distinction between services and manufacture as a justification for proving the progressiveness of the tax. Has the Chief Secretary read the National Institute Economic Review which, commenting upon the effect of the tax on regional policy, says
    "The new tax could be made a powerful instrument of regional policy. As it is, its regional policy is rather haphazard. It falls relatively heavily on the London and the South-Eastern region, which is in line with regional policy generally; on the other hand the region which receives most benefit is the West Midlands, and there is a small bias against Scotland."
    At the foot of the page are figures which show the difference between what the incidence of the tax would be if it were a flat-rate tax and what it is actually going to be because of the distinction drawn between services and manufacturing. It shows that in many of the areas this is going to have a bias. Because of the small amounts of manufacture and large amount of services in some of the regions there is going to be a distinct bias against areas of high unemployment. What can be less sensible than that?
    Mr. Tinn: Would the hon. Gentleman care to say what the effect on the North-East is likely to be, according to that article?
    Mr. Jenkin: The North-East does not appear to be separately noted. No doubt if the hon. Gentleman wants an answer to that he can put down a Question to his hon. Friend.
    The fact is that although there will be a difference depending on the sex mix, as it were, of the employees, assuming they were all men, any area—and this applies to a factory as well—where there is less than 23 per cent. in manufacturing will be worse off. This applies to industrial establishments, it applies to whole firms, and it would apply broadly to whole regions. Of course, there will be a variation depending on the proportion
    1496
    of the neutral category there may be in any area, but roughly, if there is less than a quarter of employees in manufacturing, that area is going to be worse off.
    When one realises that in the Highlands the figure is 5 to 10 per cent., all the rest being in services or neutral, one begins to realise how much worse off the Highlands are as an area under this tax.
    4.45 a.m.
    Some of the figures were brought out in a Written Answer by the Chief Secretary on 19th May. As a proportion of total tax payments, it is estimated that the premiums will work out at about 68 per cent. in England, 63 per cent. in Wales, 60 per cent. in Scotland, but only 18 per cent. in the Highlands. This is a measure of the damage which the tax will do to the Government's regional policy in these areas. How can they possibly justify introducing a tax of this kind which will nullify so much of the policy which they are carrying on from the previous Government and building on in the regions?
    As my hon. Friend the Member for Somerset, North (Mr. Dean) so powerfully argued, the need now is to strengthen the regional policy. He referred to the increased attraction of the South-East because of the pull of Europe and of the Eastern counties because of the advent of North Sea gas. The argument about the "golden triangle" of London-Paris-Hamburg will become ever stronger. Instead of weakening the impact of their regional policy, the Government ought now to be strengthening it. Here is an instrument which could be used to that end.
    The Chief Secretary trotted out the figures which we have so often had from Board of Trade Ministers about the impact of the Government's policy on factory building in the regions, trying to suggest that this was justification for their other measures and for doing nothing about this tax. But he fell into exactly the same trap as anyone opposite must do in quoting these figures. He used a four or five-year average compared with the last year or two. This totally conceals the true position. Anyone who has examined the figures for factory building or for new employment attributable to the grant of industrial development certificates year by year since 1960

    1497
    knows that the situation was virtually static until 1963.
    It was not 1964 or 1965 which marked the turning point in that matter. It was 1963. The figures show clearly that it was the free depreciation introduced in the Budget of my right hon. Friend the Member for Barnet which made the turning point in industrial building. Nothing that this Government have done since has had anything like the dramatic effect that that measure had. I wish that Government spokesmen would not go on referring to four or five-year averages. They ought to know by now that such figures are misleading. The only conclusion one can draw, if they continue to use them, is that they wish to mislead.
    I return to the nub of the case for a regional incidence in a tax of this sort. The place where a man is employed is a fact. It is certain. One cannot charge Income Tax on a regional basis, though in our investment allowances we made a very effective attempt. [Interruption.] The deputy Chief Whip need have no illusion about the sense of outrage which would be created on this side if he attempted to emulate his previous exploit.
    Where an employee is employed is a question of fact, though I must say that, in the other Bill to which we shall come next week, I suppose, the Government have made it about as difficult as they can to determine where a chap is employed. He will be employed in an establishment which may or may not be at an address, which may conceivably be part of premises—or, alternatively, the premises may be part of the establishment—and the whole or some part of it might be described as a unit. It all becomes impossibly complicated.
    If one wants to know whether a man is employed on one side of a line or the other—I have in mind a line between the development areas and the rest of the country—it is a question of fact on which there can scarcely be any argument. There might be argument about a few fringe cases, such as men on oil rigs in the North Sea, who may not be inside a development area.
    But this is why a payroll tax is an ideal instrument for regional policy. That is why we think that the tax is made nonsense of by introducing it with all the anomalies and complications that it has
    1498
    without introducing the crucial element of a regional balance in the tax. The Prime Minister at the Press Gallery Luncheon on 11th May described the tax as crude and clumsy. Many other Government spokesmen have referred to its imperfections and described it as a very rough and ready instrument. Now we are promised refinements at a later stage.
    The fact remains that this is the centrepiece of the Government's budgetary policy in the present Budget and Finance Bill, and it is a monstrosity. It is wrong in discriminating between services and manufacturing with the new ludicrous anomalies which will be thrown up, and, I hope, exposed, in the 50 per cent. rule with regard to employment, but, above all, it is wrong in failing to use the instrument which it represents, an instrument which could be made readily to hand, by using the fact of the location of employment as an instrument to strengthen and reinforce the Government's regional policy.
    I see that the Patronage Secretary has entered the Chamber. I am prepared to say exactly the same to him as I said to his deputy just now, that it would be intolerable if at this stage in a debate on regional policy the discussion were closed.
    It is for the reasons that I have outlined that I believe that a policy along the lines of Amendment No. 339 is the direction in which we ought to move. To make the tax a regional tax would give it logic and a sense which it sadly lacks at present. For this reason, when the time comes, and perhaps it will not come for a long time, I ask my right hon. and hon. Friends to join me in voting for the Amendment.
    Mr. David Steel (Roxburgh, Selkirk and Peebles): It is remarkable that as the debate has gone on throughout the night from two o'clock to five o'clock it has been coherent and of a fairly high standard. The arguments have been cogent. But I regret that it should have been necessary for us to discuss this matter through the small hours of the morning.
    On Budget day I happened to be having lunch with a Parliamentarian from a country in Europe who went into the Gallery to listen to the Budget speech. Afterwards he asked whether we had

    1499
    previously discussed the Selective Employment Tax. I said that that was the first that we had heard of it, and he was greatly surprised. It seems to me that the practice in some other countries of floating the idea of a new tax of this kind before legislation is introduced is a very good one.
    I should have thought in regard to discussion of regional policies that among the people who could have contributed their views to the Government would have been the regional planning councils set up by the Government, and that a great deal of the time that we are spending through the night in this debate could have been saved if there had been more open discussion before legislation was introduced. The concessions already made to agriculture, charities and the elderly at home have shown the need for that kind of discussion.
    I should like to make clear exactly what Liberal Party policy is on this matter. I remind hon. Members on this side of the Committee that it is a Liberal Amendment that we are discussing. Liberal policy on a regional payroll tax was very adequately outlined by my hon. Friend the Member for Cheadle (Dr. Winstanley) on Second Reading. We indicated that we wished for a general payroll tax and my hon. Friend gave the amounts we would apply in the regions. Accepting that the Government will not take up that suggestion, we are now trying to improve the Selective Employment Tax. We hope that some of our suggestions at least will be taken up by the Government. The main Amendment on which we shall divide proposes a 50 per cent. cut in the tax in the development area. Amendment No. 339 is simple. The definition is clear, for development areas are already defined by the Government. But our complaint about Government regional policy is that it does not invade the totality of Government policy, to use the Chief Secretary's own word. There is a difference between the Conservative and Liberal Parties in that we accept the list of what the Government are doing in other directions for development areas but it is no answer to the Amendment.
    If the totality of Government Policy were taken into account in considering
    1500
    regional policy, the Treasury should have asked itself not only how it could raise additional revenue without the traditional methods but how it could promote the regional policy of the Government. It has not done this. One consequence of the tax is that it will raise £35 million in Scotland, which is a development area, whereas in the prosperous area of Yorkshire and Humberside, with the same size labour force, the tax will yield only £29 million. Thus, the tax which the Chief Secretary tried to persuade us is part of the totality of Government policy, will take out of a development area more than it will take out of a prosperous area. This suggests that the Treasury has taken no account of regional policy. That is our chief objection.
    Mention has been made of the effect in development areas on housing and building of all kinds. I represent part of the country which has at last been designated a development area. A consultative group has recently been appointed and immediate development of housing in the Galashiels area is planned. We shall require a new hospital. All this infrastructure for future development will be more expensive because of the tax.
    5.0 a.m.
    As has been pointed out by other hon. Members, the tax will have a serious effect on the tourist trade and on the development areas. It is, therefore, most harmful where these two come together, that is, on the tourist trade within the development areas. Yet the Government, by their own public policy declarations, are bound to promote the industry. The White Paper on the Scottish Economy lists tourism as one of the main potential economic boosters in these areas. The Under-Secretary of State for Scotland, the hon. Member for Greenock (Dr. Dickson Mabon), said of the tourist industry on 22nd July:
    "It is, of course, a notable foreign exchange earner and foreign exchange saver and so ranks high in the export drive. At a time when we are facing a balance-of-trade problem of such severity, this must obviously be a point of great importance."—[OFFICIAL REPORT, Scottish Standing Committee, 22nd July 1965; c. 5.]
    This aspect of Scottish Office policy is not reflected in the speeches which we

    1501
    have heard from the Treasury Bench. We on the Liberal Bench regret that the Treasury Bench have not taken sufficient account of the policies which the Liberal Party has been putting forward. The hon. Member for West Fife (Mr. William Hamilton) and the hon. Member for Liverpool, West Derby (Mr. Ogden), said that no one had ever suggested that taxation ought to be at varying levels in different parts of the country and that it should not be done now. This was a classic statement which would qualify them for entry to the Conservative Party.
    My right hon. Friend the Leader of the Liberal Party argued four or five years ago that the present National Insurance stamp system should be varied in different parts of the country. The Treasury ought to be able to tell us much
    more than the Chief Secretary was able to tell us, besides the policies which other Government Departments are pursuing. In the absence of any assurance that they will look at this again and are prepared to use the machinery of the Selective Employment Tax to continue and further the promotion of their regional policies, instead of hindering them, my hon. Friends will certainly wish to divide the Committee.
    Mr. Edward Short Mr. Edward Short rose in his place and claimed to move, That the Question be now put.
    Question put, That the Question be be now put.
    The Committee divided: Ayes 139, Noes 95.

    Division No. 65.]

    AYES

    [5.2 a.m.

    Allaun, Frank (Salford, E.)

    Finch, Harold

    Ogden, Eric

    Allen, Scholefield

    Foley, Maurice

    O'Malley, Brian

    Archer, Peter

    Fraser, John (Norwood)

    Orme, Stanley

    Armstrong, Ernest

    Gardner, A. J.

    Owen, Dr. David (Plymouth, S'tn)

    Bagier, Cordon A. T.

    Cordon Walker, Rt. Hn. P. C.

    Owen, Will (Morpeth)

    Barnes, Michael

    Gregory, Arnold

    Parker, John (Dagenham)

    Beaney, Alan

    Griffiths, David (Rother Valley)

    Pavitt, Laurence

    Benn, Rt. Hn. Anthony Wedgwood

    Griffiths, Wilt (Exchange)

    Pentland, Norman

    Bennett, James (G'gow, Bridgeton)

    Hamilton, James (Bothwell)

    Perry, Ernest G. (Battersea, S.)

    Binns, John

    Hamilton, William (Fife, W.)

    Perry, George H. (Nottingham, S.)

    Bishop E. S.

    Hannan, William

    Prentice, Rt. Hn. R. E.

    Blackburn, F.

    Harper, Joseph

    Price, Christopher (Perry Barr)

    Booth, Albert

    Harrison, Walter (Wakefield)

    Redhead, Edward

    Braine, Bernard

    Hazell, Bert

    Reynolds, G. W.

    Bray, Dr. Jeremy

    Heffer, Eric S.

    Robertson, John (Paisley)

    Brooks, Edwin

    Henig, Stanley

    Robinson,Rt.Hn.Kenneth (St.P'c'as)

    Brown, Rt. Hn. George (Belper)

    Hooley, Frank

    Robinson W. O. J. (Walth'stow, E.)

    Brown, Hugh D. (G'gow, Provan)

    Hoy, James

    Roebuck, Roy

    Brown,Bob (N'c'tle-upon-Tyne,W.)

    Hughes, Emrys (Ayrshire, S.)

    Rogers, George

    Brown, R. W. (Shoreditch & F'bury)

    Hunter, Adam

    Rose, Paul

    Callaghan, Rt. Hn. James

    Hynd, John

    Ryan, John

    Carmichael, Neil

    Jackson, Peter M. (High Peak)

    Shaw, Arnold (Ilford, S.)

    Coe, Denis

    Jenkins, Hugh (Putney)

    Shore, Peter (Stepney)

    Coleman, Donald

    Johnson, James (K'ston-on-Hull, W.)

    Short,Rt.Hn.Edward (N'C'tle-U-Tyne)

    Conlan, Bernard

    Judd, Frank

    Silkin, John (Deptford)

    Corbet, Mrs. Freda

    Lestor, Miss Joan

    Silkin, S. C. (Dulwich)

    Craddock, George (Bradford, S.)

    Lever, Harold (Cheetham)

    Silverman, Julius (Aston)

    Crawshaw, Richard

    Lomas, Kenneth

    Slater, Joseph

    Cullcn, Mrs. Alice

    Loughlin, Charles

    Small, William

    Dalyell, Tam

    Luard, Evan

    Summerskill, Hn. Dr. Shirley

    Davidson, Arthur (Accrington)

    Lyon, Alexander W. (York)

    Taverne, Dick

    Davies, Dr. Ernest (Stretford)

    MacDermot, Niall

    Tinn, James

    Davies, G. Elfed (Rhondda, E.)

    Macdonald, A. H.

    Urwln, T. W.

    Davies, Ifor (Cower)

    McGuire, Michael

    Walden, Brian (All Saints)

    Davies, Robert (Cambridge)

    McKay, Mrs. Margaret

    Walker, Harold (Doncaster)

    Dell, Edmund

    Mackenzie, Gregor (Rutherglen)

    Watkins, David (Consett)

    Dempsey, James

    Mackie, John

    Wellbeloved, James

    Dewar, Donald

    Maclennan, Robert

    Wells, William (Walsall, N.)

    Diamond, Rt. Hn. John

    McNamara, J. Kevin

    Whitaker, Ben

    Dickens, James

    Mapp, Charles

    White, Mrs. Eirene

    Doig, Peter

    Mendelson, J. J.

    Whitlock, William

    Dunnett, Jack

    Molloy, William

    Williams, Clifford (Abertillery)

    Dunwoody, Mrs. Gwyneth (Exeter)

    Moonman, Eric

    Winnick, David

    Dunwoody, Dr. John (F'th & C'b'e)

    Morris, Alfred (Wythenshawe)

    Winterbottom, R. E.

    Eadie, Alex

    Moyle, Roland

    Woof, Robert

    Edelman, Maurice

    Mulley, Rt. Hn. Frederick

    Fernyhough, E.

    Oakes, Gordon

    TELLERS FOR THE AYES:

    Mr. Grey and Mr. Charles R. Morris

    NOES

    Allason, James (Hemel Hempstead)

    Batsford, Brian

    Biggs-Davison, John

    Astor, John

    Bessell, Peter

    Black, Sir Cyril

    Baker, W H. K.

    Bitten, John

    Blaker, Peter

    Boyd-Carpenter, Rt. Hn. John

    Hiley, Joseph

    Page, Graham (Crosby)

    Boyle, Rt. Hn. Sir Edward

    Hirst, Geoffrey

    Pardoe, J.

    Braine, Bernard

    Hordern, Peter

    Peel, John

    Brinton, Sir Tatton

    Howell, David (Guildford)

    Percival, Ian

    Brown. Sir Edward (Bath)

    Hunt, John

    Pink, R. Bonner

    Bruce-Gardyne, J.

    Iremonger, T. L.

    Pounder, Rafton

    Campbell, Gordon

    Jenkin, Patrick (Woodford)

    Price, David (Eastleigh)

    Channon, H. P. G.

    Jopling, Michael

    Pym, Francis

    Chichester-Clark, R.

    Kimball, Marcus

    Ramsden, Rt. Hn. James

    Clark, Henry

    King, Evelyn (Dorset, S.)

    Ronton, Rt. Hn. Sir David

    Clegg, Walter

    Kirk, Peter

    Ridley, Hn. Nicholas

    Cooke, Robert

    Kitson, Timothy

    Roots, William

    Davidson, James(Aberdeenshire,W.)

    Langford-Holt, Sir John

    St. John-Stevas, Norman

    Deedes, Rt. Hn. W. F. (Ashford)

    Longden, Gilbert

    Scott, Nicholas

    Dodds-Parker, Douglas

    Loveys, W. H.

    Sharples, Richard

    Eden, Sir John

    MacArthur, Ian

    Steel, David (Roxburgh)

    Fortescue, Tim

    Mackenzie, Alasdalr(Ross&Crom'ty)

    Thatcher, Mrs. Margaret

    Foster, Sir John

    Maclean, Sir Fitzroy

    Thorpe, Jeremy

    Gibson-Watt, David

    Macleod, Rt. Hn. Iain

    Turton, Rt. Hn. R. H.

    Glover, Sir Douglas

    McMaster, Stanley

    Wainwright, Richard (Colne Valley)

    Goodhart, Philip

    Maude, Angus

    Ward, Dame Irene

    Coodhew, Victor

    Maxwell-Hyslop, R, J.

    Weatherill, Bernard

    Gower, Raymond

    Mills, Peter (Torrington)

    Webster, David

    Grant, Anthony

    Miscampbell, Norman

    Whitelaw, William

    Griffiths, Eldon (Bury St. Edmunds)

    Mitchell, David (Basingstoke)

    Winstanley, Dr. M. P.

    Grimond, Rt. Hn. J.

    More, Jasper

    Younger, Hn. George

    Hamilton, Marquess of (Fermanagh)

    Munro-Lucas-Tooth, Sir Hugh

    Hastings, Stephen

    Murton, Oscar

    TELLERS FOR THE NOES:

    Hawkins, Paul

    Nott, John

    Mr. Lubbock and

    Higgins, Terence L.

    Orr-Ewlng, Sir Ian

    Mr. Hoosod.

    Question put accordingly, That the proposed words be there inserted: —
    The Committee divided: Ayes 94, Noes 135.

    Division No. 66.]

    AYES

    [5.10 a.m.

    Allason, James (Hemel Hempstead)

    Griffiths, Eldon (Bury St. Edmunds)

    Murton, Oscar

    Astor, John

    Grimond, Rt. Hn. J.

    Nott, John

    Baker, W. H. K.

    Hamilton, Marquess of (Fermanagh)

    Orr-Ewing, Sir Ian

    Batsford, Brian

    Hastings, Stephen

    Page, Graham (Crosby)

    Bessell, Peter

    Hawkins, Paul

    Pardoe, J.

    Biffen, John

    Higgins, Terence L.

    Peel, John

    Biggs-Davison, John

    Hiley, Joseph

    Percival, Ian

    Black, Sir Cyril

    Hirst, Geoffrey

    Pink, R. Bonner

    Blaker, Peter

    Hordern, Peter

    Pounder, Rafton

    Boyd-Carpenter, Rt. Hn. John

    Howell, David (Guildford)

    Price, David (Eastleigh)

    Boyle, Rt. Hn. Sir Edward

    Hunt, John

    Pym, Francis

    Brinton, Sir Tatton

    Iremonger, T. L.

    Ramsden, Rt. Hn. James

    Brown, Sir Edward (Bath)

    Jenkin, Patrick (Woodford)

    Ronton, Rt. Hn. Sir David

    Bruce-Gardyne, J.

    Jopling, Michael

    Ridley, Hn. Nicholas

    Campbell, Gordon

    Kimball, Marcus

    Roots, William

    Channon, H. P. G.

    King, Evelyn (Dorset, S.)

    St. John-Stevas, Norman

    Chichester-Clark, R.

    Kirk, Peter

    Scott, Nicholas

    Clark, Henry

    Kitson, Timothy

    Sharples, Richard

    Clegg, Walter

    Langford-Holt, Sir John

    Steel, David (Roxburgh)

    Cooke, Robert

    Longden, Gilbert

    Thatcher, Mrs. Margaret

    Davidson,James(Aberdeenshire, W.)

    Loveys, W. H.

    Thorpe, Jeremy

    Deedes, Rt. Hn. W. F. (Ashford)

    MacArthur, Ian

    Turton, Rt. Hn. R. H.

    Dodds-Parker, Douglas

    Mackenzie, Alasdair(Ross&Crom'ty)

    Wainwright, Richard (Colne Valley)

    Eden, Sir John

    Maclean, Sir Fitzroy

    Ward, Dame Irene

    Fortescue, Tim

    Macleod, Rt. Hn. lain

    Weatherill, Bernard

    Foster, Sir John

    McMaster, Stanley

    Webster, David

    Gibson-Watt, David

    Maude, Angus

    Whitelaw, William

    Glover, Sir Douglas

    Maxwell-Hyslop, R. J.

    Winstanley, Dr. M. P.

    Goodhart, Philip

    Mills, Peter (Torrington)

    Younger, Hn. George

    Goodhew, Victor

    Miscampbell, Norman

    Gower, Raymond

    Mitchell, David (Basingstoke)

    TELLERS FOR THE AYES:

    Grant, Anthony

    More, Jasper

    Mr. Lubbock and

    Munro-Lucas-Tooth, Sir Hugh

    Mr. Hooson.

    NOES

    Allaun, Frank (Salford, E.)

    Bishop, E. S.

    Carmicheal, Neil

    Allen, Scholefield

    Blackburn, F.

    Coe, Denis

    Archer, Peter

    Booth, Albert

    Coleman, Donald

    Armstrong, Ernest

    Bray, Dr. Jeremy

    Conlan, Bernard

    Bagier, Gordon A. T.

    Brooks, Edwin

    Corbet, Mrs. Freda

    Barnes, Michael

    Brown, Rt. Hn. George (Belper)

    Craddock, George (Bradford, S.)

    Beaney, Alan

    Brown, Hugh D. (G'gow, Provan)

    Crawshaw, Richard

    Benn, Rt. Hn. Anthony Wedgwood

    Brown, Bob(N'c'tle-upon-Tyne,W)

    Cullen, Mrs. Alice

    Bennett, James (G'gow, Bridgeton)

    Brown, R. W. (Shoreditch & F'bury)

    Dalyell, Tarn

    Binns, John

    Callaghan, Rt. Hn. James

    Davidson, Arthur (Accrington)

    Davies, Dr. Ernest (Stretford)

    Hynd, John

    Redhead, Edward

    Davies, G. Elfed (Rhondda, E.)

    Jackson, Peter M. (High Peak)

    Reynolds, C. W.

    Davies, Ifor (Cower)

    Jenkins, Hugh (Putney)

    Robertson, John (Paisley)

    Davies, Robert (Cambridge)

    Johnson, James (K'ston-on-Hull, W.)

    Robinson, Rt.Hn. Kenneth (St.P'c'as)

    Dell, Edmund

    Judd, Frank

    Robinson, W. O. J. (Walth'stow, E.)

    Dempsey, James

    Lestor, Miss Joan

    Roebuck, Roy

    Dewar, Donald

    Lever, Harold (Cheetham)

    Rogers, George

    Diamond, Rt. Hn. John

    Lomas, Kenneth

    Rose, Paul

    Dickens, James

    Loughlin, Charles

    Ryan, John

    Doig, Peter

    Luard, Evan

    Shaw, Arnold (Ilford, S.)

    Dunnett, Jack

    Lyon, Alexander W. (York)

    Shore, Peter (Stepney)

    Dunwoody, Mrs. Gwyneth (Exeter)

    MacDermot, Niall

    Short,Rt. Hn. Edward(N'c'tle-u-Tyne)

    Dunwoody, Dr. John (F'th & C'b'e)

    Macdonald, A. H.

    Silkin, John (Deptford)

    Eadie, Alex

    McGuire, Michael

    Silkin, S. C. (Dulwich)

    Edelman, Maurice

    McKay, Mrs. Margaret

    Silverman, Julius (Aston)

    Fernyhough, E.

    Mackenzie, Gregor (Rutherglen)

    Slater, Joseph

    Finch, Harold

    Mackle, John

    Small, William

    Foley, Maurice

    Maclennan, Robert

    Summerskill, Hn. Dr. Shirley

    Ford, Ben

    McNamara, J. Kevin

    Taverne, Dick

    Fraser, John (Norwood)

    Mapp, Charles

    Tinn, James

    Gordon Walker, Rt. Hn. P. C.

    Mendelson, J. J.

    Urwin, T. W.

    Gregory, Arnold

    Molloy, William

    Walden, Brian (All Saints)

    Griffiths, David (Rother Valley)

    Moonman, Eric

    Walker, Harold (Doncaster)

    Griffiths, Will (Exchange)

    Moyle, Roland

    Watkins, David (Consett)

    Hamilton, James (Bothwell)

    Mulley, Rt. Hn. Frederick

    Wellbeloved, James

    Hamilton, William (Fife, W.)

    Oakes, Gordon

    Wells, William (Walsall, N.)

    Hannan, William

    Ogden, Eric

    Whitaker, Ben

    Harper, Joseph

    O'Malley, Brian

    White, Mrs. Eirene

    Harrison, Walter (Wakefield)

    Orme, Stanley

    Whitlock, William

    Hazell, Bert

    Owen, Dr. David (Plymouth, S'tn)

    Williams, Clifford (Abertillery)

    Heffer, Eric S.

    Parker, John (Dagenham)

    Winnick, David

    Henig, Stanley

    Pentland, Norman

    Winterbottom, R. E.

    Hooley, Frank

    Perry, Ernest G. (Battersea, S.)

    Woof, Robert

    Hoy, James

    Perry, George H. (Nottingham, S.)

    TELLERS FOR THE NOES:

    Hughes, Emrys (Ayrshire, 8.)

    Prentice, Rt. Hn. R. E.

    Mr. Grey and

    Hunter, Adam

    Price, Christopher (Perry Barr)

    Mr. Charles R. Morris

    5.15 a.m.
    Mr. Iain Macleod: I beg to move,
    That the Chairman do report Progress and ask leave to sit again.
    Some five hours ago I moved a similar Motion, and in view of the dwindling Government majorities the time has come when we should begin to draw our deliberations to a close, but the point I want to put to the Chancellor is this. The next Amendment, No. 231, is, of course, an important one, but the one after that, No. 34, I think everyone will agree, is one of the most important, perhaps the single most important, Amendment to the Clause, and perhaps to the whole Finance Bill. I think it would be a great mistake, and I hope the Chancellor will agree, to start Amendment No. 34 at this time of the morning, and therefore I move the Motion simply to ascertain what the Government's intentions are.
    Mr. Callaghan: If I may say so, I think it is reasonable to ask what our intentions are, after the lapse of time since the right hon. Gentleman last moved such a Motion. As he says, Amendment No. 231 is related to the debate we have had. It takes a specialised sector of the areas we have been discussing and endeavours to relate what we are doing
    1506
    to that sector. I should have thought that it would have made for continuity if we had dealt with that Amendment, at least. It will mean that we shall then have done five Amendments today.
    As for the rest, I agree that to start on Amendment No. 34 now, which contains within it a large number of other Amendments, would mean that we should find it difficult to finish the debate, in view of the other preoccupations which hon. Gentlemen may have during the course of the morning. If it met with the consent of the Committee, I would myself move to report Progress when we had got the next Amendment. No. 231.
    Mr. Iain Macleod: Very well. I am content with that. May I beg to ask leave to withdraw the Motion.
    Motion, by leave, withdrawn.
    Mr. Bruce-Gardyne: I beg to move Amendment No. 231, in page 48, line 27, at the end to insert:
    (e) if that person is employed in any regional planning area where, over a period of one calendar year prior to the application of this tax, the average rate of unemployment exceeded the national average rate of unemployment by more than 60 per cent., one penny.
    As my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) has

    1507
    just said, this is an important Amendment, and I only regret that we reach it at this hour, but I am sure that that will not deter any of my hon. Friends and, I hope, some hon. Gentlemen opposite from rising to comment upon it.
    In some respects, the Amendment is similar to the ones that we were discussing just now, except that it deals with areas of above average unemployment specifically. I suggest that it has certain specially attractive features, by which I mean features which should make it specially attractive to the Treasury Bench.
    In the first place, unlike the previous Amendments, it applies to regional planning areas. I appreciate that where we are dealing with development areas, administrative difficulties may arise. The whole of Scotland is a development area, except, for some obscure reason buried in the minds of the Board of Trade, the Cities of Leith and Edinburgh. Clearly, that exception might lead to special administrative difficulties. But in the case of the Amendment, we are talking about regional planning areas, and those sorts of administrative difficulties should not arise.
    The second speciality of the Amendment should make it even more attractive to the Government Front Bench. I feel fairly confident that, having heard the arguments which we shall advance in its support, the Government will be prepared to accept it. If we are to believe right hon. Gentlemen opposite in all that they have said about the effectiveness of the Government's regional planning policies, they can accept the Amendment with impunity, because the exceptions from the payroll tax which it seeks to make will never be called into operation. If their policies for regional development are as effective as they claim they will be, the time will soon come when certain regions in the country will not have unemployment of 60 per cent. or more above the national average. The Amendment provides that if the regional level of employment is not 60 per cent. above the national average the exception will not apply.
    Furthermore, the Amendment has to be considered in conjunction with the fact that, when the time comes to do so, my right hon. and hon. Friends will
    1508
    suggest that the whole system of premiums proposed under the Selective Employment Payments Bill should be withdrawn, and the Amendment that we are discussing will provide an additional saving.
    If, despite our views, the Government insist on retaining the premium system, we would propose, if they accept this Amendment, a further Amendment to the Ministry of Labour Bill to ensure that establishments in regional planning areas which qualify for the concession in the Amendment do not get the premium. That is only reasonable.
    I think that the Chancellor can only agree that we are approaching this Amendment in a spirit of considerable reasonableness, and also, I think, in a spirit of considerable concern for the Revenue. I, therefore, feel fairly confident that he will accept it.
    We have tabled the Amendment because we do not trust right hon. Gentlemen opposite. We do not believe that their regional policies will be nearly as efficient or as effective as they like to claim they will be. We do not believe, in particular, that the Selective Employment Tax can be imposed, with no rebates, for service and construction industries in areas like the Highlands, where 76 per cent. of the employment is in these industries, without adding to the problems of unemployment and depopulation. If the Government have the courage of their convictions, they have nothing whatsoever to lose by accepting the Amendment.
    At this point I should like to refer to what the Chief Secretary said on an earlier Amendment. He said that we on this side of the Committee had accepted the idea of selectivity, and we wanted to extend it. We have heard this before, and no doubt we will hear it again. It is rubbish, and the right hon. Gentlemen know that it is. The truth of the matter is that what many of us on this side of the Committee have argued for on many occasions is a degree of differentiation in a payroll tax. We have always opposed—and we always will—selectivity between different industries. There is a clear distinction here, and I am certain that the Chief Secretary can understand that as well as the next man can.

    1509
    As I said, we do not feel able to rely on the Government's protestations that the areas of high unemployment will not be severely affected by this tax, and that areas such as the Highlands that suffer from considerably above average unemployment and at the same time depend so heavily on the construction and service industries, will not be affected.
    5.30 a.m.
    We are simply not prepared to rely on the Secretary of State for Scotland waving his wand and producing manufacturing industries to benefit from the Selective Employment Tax. Frankly we do not believe that he ever had a wand, and we believe that if he ever had one he lost it a long time ago.
    I would comment again that, as so often happens when we are discussing a matter of crucial importance to the Scottish economy—and goodness knows, from listening to the speeches of right hon. and hon. Members opposite on so many occasions, we can be in no doubt that one of the crucial problems of Scotland over the years has been the high level of unemployment—we have nobody from the Scottish Office on the Front Bench. There is nobody to consider the comments which we have made and will make on this matter of vital importance to the Scottish economy. This is the sort of treatment which we are getting used to from this Government, but we do not like it any more the longer it goes on.
    The Minister of State, Board of Trade, assured us the other night that if it were found that the application of the Selective Employment Tax on areas of high unemployment had undesirable effects, he would at least draw the attention of the Chancellor to the suggestion made by my hon. Friend the Member for Worthing (Mr. Higgins) that the system of free depreciation, which has proved so valuable in the past, should be reinstituted in these areas.
    A small offering of that kind is not enough and I can assure the Chancellor here and now that we should be pressing for its fulfilment in the future. We still do not believe that it is enough and for that reason we have put down this Amendment.
    1510
    I do not want to rub the nose of the Chancellor once more now into the things he and some of his right hon. Friends said about the proposal for a payroll regulator introduced by my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) in his 1961 Budget. I cannot allow the Chancellor to get away with what he said on Thursday evening when my right hon. Friend the Member for Enfield, West reminded him, not for the first time, when he claimed that my right hon. and learned Friend the Member for Wirral could not impose the payroll regulator in 1961 because of the high incidence of unemployment in certain regions, that the claim simply was not borne out by the facts. My right hon. Friend challenged him to agree that
    "the rate which he refers to as a rate of heavy unemployment in 1961 was precisely one-tenth of 1 per cent., different from what it is today."
    The Chancellor replied:
    "The right hon. Gentleman has made that point before. It does not destroy my case, because at the first whiff of disinflation the regions suffered most. That was why my predecessor, the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd) was not able to do the job that we are now doing."—[OFFICIAL REPORT, 23rd June, 1966; Vol. 730, c. 1043.]
    Let us look at the figures. In April, 1966, the latest regional unemployment figures that we have, the rate of unemployment in London and the South-East was 0·7 per cent. The figure for the West Midlands was 0·7 per cent., for Scotland 2·6 per cent., and the national average was 1·3 per cent. The figures for March, 1961, the last monthly figures which my right hon. and learned Friend would have had in his hands in making his proposal in the 1961 Budget, were: London and the South-East, 10 per cent.; West Midlands, 1·3 per cent.; Scotland, 3·2 per cent., and overall, 1·5 per cent. The regional spread between the highest and the lowest was proportionately higher in the latest figures than in the figures at the time that my right hon. and learned Friend introduced his proposal in 1961. Yet the Chancellor says that at the first whiff of disinflation, the regions suffered most.
    Mr. Eric S. Heffer rose ——
    Mr. Bruce-Gardyne: I will not give way.
    Mr. Heffer: Let us have the numbers involved.
    Mr. Bruce-Gardyne: In September, 1961, perhaps the last month in which my right hon. and learned Friend might have introduced a payroll regulator, the figures were: London and South-East, 0·9 per cent.; West Midlands, 1·1 per cent.; Scotland, 2·9 per cent.; and overall, 1·4 per cent. Far from the first whiff of disinflation being felt in the regions at that time, affecting my right hon. and learned Friend's proposals, the regional imbalance was declining.
    Mr. William Hannan: Will the hon. Member admit this basic fact—that the figures of unemployment in Scotland at the moment are the lowest they have been for 10 years?
    Mr. Bruce-Gardyne: The hon. Member has anticipated my argument. If he will contain himself for a moment. I am coming precisely to that point. It is true that at the moment the level of unemployment in Scotland is very low, and we are glad of that, but the level of unemployment in England is far lower and the regional differentiation between Scotland and the areas of high over-employment in the South-East is more than it was in 1961. There is no ground for the right hon. Gentleman to pretend that that was the reason why the Chancellor opposed my right hon. and learned Friend's proposals in 1961. In terms of regional development, the Government have, in real terms, merely basked in the achievements of the last Conservative Government. [Interruption.] Hon. Gentlemen opposite may find themselves laughing on the other side of their faces when the Selective Employment Tax is in operation and has been felt in the areas of high unemployment.
    As I say, the Government have been basking in the progress made by the last Conservative Government. However, they have also created a situation of very high over-employment indeed, as well as the over-utilisation of resources, in the South and Midlands. It is no surprise, therefore, if industry has continued to expand in Scotland, for expanding firms in other parts of the country have been totally unable to obtain labour except by going to areas where there is still a reservoir of labour on which to draw.
    1512
    The test has yet to come. It is precisely because we do not believe that the Government's so-called policies of regional development will enable areas of high unemployment to surmount this test that we tabled the Amendment. I insist that if the Government have confidence in their policies of regional development, they have nothing to fear from accepting it.
    Mr. David Steel: Does the hon. Gentleman not accept that his Amendment would take us right back to 1960, the Local Employment Act and the restrictions contained in that Measure relating to unemployment? Is he not aware that the Government are already one step ahead of the Amendment in the new development area scheme?
    Mr. Bruce-Gardyne: I was coming to that. I would have liked to have drafted the Amendment to deal with the problem of depopulation as well as that of unemployment. However, my hon. Friends and I have wanted to submit the Amendment in such a way that it would be simple to operate and so that the Government could not argue that it would be unacceptable on administrative grounds alone. That is why we chose the criterion of unemployment, although the problem of depopulation is just as serious and, in parts of Scotland, is a great deal more serious.
    I was about to deal with the Government's policies for the development areas, because we argue that the Clause, without the Amendment, would be contrary to the Government's intentions for areas of higher than average unemployment, such as Scotland. In the Government's so-called plan for the Scottish economy, it was stated in the summary on page nine that to deal with the problems of unemployment in Scotland, the Government looked to the creation of at least 130,000 new jobs by 1970, of which about 50,000 might be in manufacturing industry, 20,000 in the construction industry and 60,000—or almost half of the total—in the service industries. In other words, only 50,000 out of the 130,000 would be in manufacturing industry, which S.E.T. is ostensibly designed to help.
    5.45 a.m.
    On page 32 of the Scottish Plan, in page 124, there was pointed out the vital importance of
    "adequate and up-to-date services if Scotland is to be an attractive area for incoming industrialists."
    I do not need to elaborate on this. [HON. MEMBERS: "Hear, hear."] If hon. Members encourage me, I certainly will. The Chancellor may have had this document drawn to his attention. I sometimes wonder whether the Secretary of State for Scotland serves this purpose, but I am sure that there are others who must do so.
    In all these cases in the construction and service industries this tax will increase the risk of high unemployment in areas which already have above the national average. From Scotland in particular the Chancellor should bear in mind another consideration. This year when the Selective Employment Tax is being introduced coincides with rating revaluation in Scotland but not in England. This is an added burden which individuals will have to carry and it will hit particularly hard areas of high unemployment.
    Perhaps the most striking example of how the new tax without this Amendment will fly in the face of the Government's own policies comes in its incidence for the hotel industry. I read a most interesting letter the other day from the head of one of the largest catering firms in Scotland. He pointed out that the tax
    "applies equally to development areas and to areas of acute labour shortage. Thus you meet the quite remarkable anomaly that an hotel, for example, in a development area can apply for a 25 per cent. grant under the Local Employment Act and will receive that grant if it gives new direct employment on a sufficient scale in relation to the capital investment in buildings; there being thus a substantial discouragement to economy in staff. Having obtained the grant, there will be imposed a charge of 25s. (or 12s. 6d.) per head per week in order to encourage staff economies."
    He adds:
    "Perhaps it is an understatement to describe this as the economics of the madhouse."
    Unfortunately, the economics of the madhouse are what we are becoming increasingly used to from right hon. Gentlemen opposite.
    Several of my hon. Friends have further points to make on this Amendment, so I shall say no more. [HON. MEMBERS:
    1514
    "Hear, hear."] Hon. Members opposite had better be careful and not tempt me. I hope that I have said enough to convince the Chancellor that if he means what he says about regional development policies he can accept this Amendment with impunity. If he does not accept this Amendment, clearly he cannot mean what he says of regional development policy.
    Mr. Tam Dalyell: The hon. Member for South Angus (Mr. Bruce-Gardyne) should not be allowed to get away with blowing his trumpet like that. He knows perfectly well that the fact of 2·6 per cent. unemployment rate which is greater than in the West Midlands and the South-East of England is related to the nature of our industry. Unfortunately, we come from an area which by tradition has depended on the coal industry and foundries. Many people who have worked in those industries are not able to work and these figures are made up from people who suffer pneumoconiosis and other diseases.
    The second point is of rather a different nature. [Laughter.] Of course, it is, and the former Secretary of State for Scotland, the right hon. Member for Argyll (Mr. Noble) knows it. Suppose we look at the Chancellor's alternatives. I cannot read the Chancellor's mind, but if he had not imposed a Selective Employment Tax it might be a fair guess that in the Chancellor's mind there might have occurred the thought that he would wish to impose taxation on motor vehicles. If this had happened, if he had concentrated on the narrow front of the motor industry, as he might have done, instead of going for a broad-based tax, then Scotland would have been hit much harder than it has been.
    Sir Fitzroy Maclean: I am naturally of a charitable disposition, even at this hour of the morning and in spite of what we have had to put up with in the course of the last 12 hours. It is this charitable disposition which leads me to the conclusion that it is simply a consequence of Socialist planning, and not anything worse, that leads to Socialist Governments always seeming to find themselves, as was said by the hon. Member for Fife, West (Mr. William Hamilton), who is not here at the moment, doing in practice the opposite of what they say, and

    1515
    perhaps even of what they think they are going to do. This seems to me the kindest explanation of the Government's conduct over this tax. Nobody could have been more lavish in their promises to help Scotland, the islands, the tourist industry and the development areas in general.
    Again I want to be charitable, and I imagine that the reason why there is not a single Scottish Minister on the Government Front Bench this morning is not just that he cannot be bothered or is not interested. It must be that the Scottish Members are ashamed and embarrassed by what their colleagues have done. I hope hon. Members opposite who sit for Scottish constituencies are as shocked as we are that nobody from St. Andrew's House has spoken.
    Mr. James Dempsey: There is a Scotsman here.
    Sir F. Maclean: Where? I cannot see one. He must be a very small one.
    Nobody could have laid greater emphasis than the present Government have done on the importance of the tourist industry and its potentialities. The hon. Member for Roxburgh, Selkirk and Peebles (Mr. David Steel) quoted the Under-Secretary of State in one of our debates in the Scottish Grand Committee. I should like to refer to something else that he said. He said that the tourist industry offers one of the most hopeful prospects for the development of large areas of Scotland. That is perfectly true. He went on to say that it is the foremost dollar earner in the country. It is also one of the greatest earners and savers of foreign currency, amounting to £350 million a year, and, if given a chance, it could be £500 million by 1970.
    But the Government use these fiscal measures not to encourage the tourist industry, but deliberately to discourage it. They discourage it and all the subsidiaries which are linked with it, which help it and are helped by it. They discourage the building industry, which again is closely connected with tourism. Everybody knows that what the tourist industry in Scotland, and indeed in the country as a whole, suffers from is a shortage of skilled workers. What the Government are doing is deliberately aggravating it. I speak from
    1516
    first-hand experience on this subject. It is a well known fact that the labour costs of hotels represent about 30 per cent. of the turnover. Now this tax is going to increase these labour costs by 10 per cent. Then there is the whole question of part-time workers in hotels. There are a lot of part-time workers who do very useful work in the tourist industry. What is going to happen to them?
    Once again, to take the Highlands, 76 per cent. of industry in the Highlands is service industry and only 10 per cent. is manufacturing industry. The other 14 per cent. is made up of agriculture, fishing, forestry and so on. In England, I understand that 68 per cent. of the people hit by this tax will get it refunded to them, but in the Highlands only 18 per cent. will get a refund. My own constituency is not in the Highlands but a very large part of it is in exactly this position of depending almost entirely on the service industries, such as the tourist industry.
    What will be the result of all this so far as the industries in question are concerned? They will have the choice of either lowering their standards or, where they are able to, putting up their prices. Inevitably this is going to aggravate and cause unemployment. One of the things the Government were always saying when they were in Opposition was that they were going to combat depopulation, but they are going to make the Highlands altogether less viable by hitting at the small concerns.
    My hon. Friend the Member for Perth and East Perthshire (Mr. Ian MacArthur) made some very good points a good many hours ago about how this tax would hit the small man employing one or two people in the Highlands.
    I can think of a village—a small town almost—where at the moment there is no plumber and no electrician. There is some prospect of a small plumber and electrician coming there, but this tax will of course drive them away because they have to have one man running the business and one man out in the van, and if it can only be one man the whole thing just will not work.
    What will happen to the labour that will inevitably be shed by the service industries hit by this tax? They will

    1517
    not be absorbed by manufacturing industries because in most parts of the Highlands there are no manufacturing industries to absorb them. So they will simply either move away and depopulate the Highlands still further, or go on the dole and use public money in that way. It is not surprising that the phrase "Callaghan's clearances" should have been coined to describe what is happening.
    What the Government are in fact doing is asking people to do one thing and then forcing them to do another, giving people money with one hand, as they are through the Highland Development Board and the investment grant, and then taking it away with another and, as usual, paying a whole lot of civil servants to preside over these affairs. In the long run, as I have said, they will put a lot of people on the dole and waste a lot more public money. There could be no better demonstration of Socialism in practice.
    The Times some time ago back spoke of the Government's "slow retreat" from their original proposals on this tax. It is true that we on this side have managed to extract some concessions from them. I hope that, as a result of our labours tonight, we shall extract a lot more concessions in the spirit of this Amendment and that the slow retreat will be converted into a complete rout.
    6.0 a.m.
    Mr. Peter Doig: The hon. Member for Bute and North Ayrshire (Sir F. Maclean) talks about the tourist industry as though it were the most important form of employment in Scotland. It is nothing of the kind. I do not underestimate its financial advantages to Scotland, but for providing employment any local authority would far rather have manufacturing industry in preference to tourism. Tourism provides employment only at certain times of the year for the bulk of employees.
    Sir F. Maclean Sir F. Maclean rose——
    Mr. Doig: I am sorry. I cannot give way. The hon, Gentleman can come in again later if he wants to.
    Sir F. Maclean: The hon. Gentleman makes a false point.
    The Deputy Chairman: Order. If the hon. Member who has the Floor does not give way, the hon. Member for Bute
    1518
    and North Ayrshire must resume his seat.
    Mr. MacArthur: On a point of order, Mr. Irving. Is it not in keeping with the usual custom, if an hon. Member whose speech has been directly referred to wishes to intervene, that the hon. Member making the reference should give way?
    The Deputy Chairman: That is not a point of order.
    Mr. Doig: At 6 o'clock in the morning, I do not feel like giving way.
    Sir F. Maclean: Afraid to.
    Mr. Doig: What is wanted in Scotland is regular, steady employment all the year round, and very few in the tourist industry get that.
    The hon. Member for South Angus (Mr. Bruce-Gardyne) astonished me. He spoke of high unemployment in Scotland. In Dundee it is 1·6 per cent., the lowest it has ever been, so far as I can remember. Under the last Tory Government it was over 5 per cent. I can remember being one of 8,000 unemployed in Dundee, and today the total is less than 2,000. Whether it is more than double the national average or not I do not care in this argument. It is 1·6 per cent. under a Labour Government and it was 5 per cent. under a Tory Government. No wonder the people of Scotland are returning an ever-growing number of Labour Members. They know the difference. They are concerned not about percentages but about the number of people who get jobs.
    The hon. Gentleman will know of what his Government did to the jute industry. They very nearly ruined some of the villages in South Angus. His predecessor, Sir James Duncan, also in the early hours of the morning, supported the two Dundee Members in pleading with his own Government to withdraw their cuts in protection for the jute industry because he knew how deadly they would be for South Angus.
    Mr. Bruce-Gardyne: Is the hon. Gentleman aware that in recognition of the terrible things the Conservative Government did to the jute industry in South Angus, the constituency at the last General Election produced the biggest swing to the Conservatives in the country?
    Mr. Doig: If the hon. Gentleman will look at the figures again he will find that he is wrong. The reason why there was a bigger majority was the intervention of a Liberal. For the same reason my majority nearly doubled. The intervention of a third candidate invariably helps the sitting candidate. The hon. Gentleman's overall majority did not go up; it went down.
    Mr. Bruce-Gardyne: The hon. Gentleman is wrong.
    Mr. Doig: I am not. I have studied the figures.
    Let us consider some of those who have said that the Labour Government have done a great job for Scotland. Lord Polwarth has said that Scotland has never had a better balanced economy. The banks say the same time. The people of Scotland know, if the hon. Member for South Angus does not, that there are far more jobs and far less unemployment in Scotland than before. I am certain that Belfast Members of Parliament would be very happy if the unemployment figure for Northern Ireland was as good as that in Scotland. The Government have done a terrific job in providing jobs in Scotland and keeping down unemployment. I am amazed that any hon. Member opposite has the nerve to use that argument. The figures are contrary to what the hon. Gentleman has been saying.
    Mr. G. Campbell: It has been pointed out that the Amendment has been drafted so as to be administratively easy to operate and to be easily acceptable to the Government. I hope that when the Chancellor is considering it he will be reminded of the attitude of his right hon. Friends when they were in opposition to the proposal for a payroll regulator, which was put forward in 1961. The First Secretary and the present President of the Board of Trade said that it should not be allowed to have full impact on the development areas, and the adjectives "insane" and "frightening" were used in describing what the effects might be of a uniform 4s. payroll tax in those areas. Now it is to be 25s. per man, and, with premiums to manufacturing industry, it means that benefits will be flowing to the flourishing areas at the expense of the others.
    1520
    An hon. Member for Birmingham praised the inequality of the tax when he spoke on the Second Reading of the Selective Employment Payments Bill last week, but had the goodness at the same time to admit that it was his own area which would benefit most from it. I shall speak of a region at the other end of the scale—the Highlands and Islands and the North of Scotland. Figures have already been given, but I will give them again briefly. I mentioned them on the Second Reading of the Finance Bill and the Second Reading of the Selective Employment Payments Bill, when I said that in the seven crofting counties manufacturing industries provided only 10 per cent. of the employment.
    As my hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin) said today, and as I said on both those occasions, the Chief Secretary has given the figure for the percentage of the tax collected which will return in premiums and refunds to the Highlands and Islands as 18, which compares with 68 per cent. for the whole of England. This demonstrates, as nothing else can, that the tax will be at a much higher rate per job in the Highlands and Islands than anywhere else.
    When we heard about the problems of the South-West earlier—and I sympathise with them—we were told that manufacturing industry in that area provided 25 per cent. of the employment. It provides 10 per cent. in the Highlands and Islands. The Government have given no answer to this so far. All they have said is that they are doing other things in such areas through regional development. It has become a parrot cry. It was summed up by the Chancellor on Second Reading of the Selective Employment Payments Bill. He said:
    "I will rehearse some of the things that are being done. In the development districts investment grants for plant and machinery for qualifying processes are to be given at the rate of 40 per cent."
    What is the use of 40 per cent. grant over a 20 per cent. grant if one does not qualify for a grant at all?
    Where only 10 per cent. of employment in an area is provided by manufacturing industry, most of the businesses providing employment will not qualify for the 40 per cent. grant, although they qualified for the investment allowances which have

    1521
    been removed. To say that there will be a 40 per cent. grant in the Highlands and Islands for manufacturing industry is no help because there is so little manufacturing industry there and one cannot hope to introduce large quantities of new manufacturing industry in a short time. The Chancellor went on:
    "In the case of Local Employment Act assistance there will be assistance for projects providing extra jobs in development areas."
    My hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) has pointed out, in reference to the tourist industry—which is so important to the North of Scotland—that grants are available under the Local Employment Act, as amended by the Industrial Development Bill, only if extra work is provided. But the Government now propose to tax the employment of extra men in this way. That is complete contradiction of policies. The Chancellor also said:
    "There is the control of office development providing extra jobs in development areas."—[OFFICIAL REPORT, 23rd June, 1966; Vol. 730, c. 1048.]
    What extra jobs have been provided so far in the Highlands and Islands by control of office development?
    The Chancellor made a further point about the exemption of development areas from his deferment of capital projects in his measures of last July and continued by his statement on 8th February. The Government have been at pains to say that these postponements did not amount to very much. They have been playing them down. Now we are told that it is a special benefit for development areas that they have escaped the axe. The Government claim that this escape is a special measure of regional development.
    But this again will not be of much help to the Highlands and Islands and the North of Scotland. It cannot compare with this proposal to tax the large majority of jobs in the area, including new ones, if they can be created. Most new jobs created are bound to be in services. This policy is leading to the depopulation of the rural areas of Scotland. The S.E.T. should be called the "Scottish Emigration Tax".
    6.15 a.m.
    The right hon. Gentleman, when he put forward these measures at the end of the debate last week, talked of "poppy-
    1522
    cock". I submit that the four points put forward by him, about which I have been speaking in relation to their application to the Highlands and Islands and the North-East, are complete poppycock and they will rebound on his head in the same way as he said the poppycock would rebound on other people's heads. It is no good his saying that the establishment of the Highland Development Board is yet another factor which will somehow neutralise everything else done under the tax.
    Anyone can set up a new board. That does nothing in itself. The point is what the Government do in setting up the Board to enable it to go ahead with measures to assist regional development. Since it has been set up, the Board has been hit by two major measures, the cancellation of investment allowances and this tax. We have put Questions to Scottish Ministers, whose absence this morning is deplored, asking whether it is the Government's objective to reduce jobs in the service industries in the Highlands and the North-East of Scotland. The answer has been "no". If this tax is to carry out the objectives we have heard about, then surely it is supposed to reduce jobs in the service industries, and to try to steer men towards manufacturing industries.
    When the Chief Secretary tries to make out that, in suggesting this regional variation, we have somehow come round to the Government's view about the tax, this is nonsense. Several of us made it perfectly clear on Second Reading that we were against this selectivity of premuims and so on, and that we were in favour, if a tax of this kind had to be introduced, of a rate applied across the board; and that if there were to be variations, it had to be done by regions. It is nonsense for the Chief Secretary to pretend that this is something new.
    Mr. David Gibson-Watt: It is more poppycock.
    We have heard a great deal of poppy-cock and no doubt we shall hear more. I hope that the Government will consider the effect of these measures which they are carrying out.
    Mr. William Small: I intervene briefly to reply to the allegations of the hon. Member for

    1523
    Bute and North Ayrshire (Sir F. Maclean) and to deal with "Callaghan's Clearances". I ask him to bear in mind what the Treasury has done for Scotland, particularly in relation to Fairfield's. I do not see any clearances on shipbuilding under this Government. Taxation as such is not a total instrument for directing industry to Scotland.
    I hear no praise for this Government's action in sending industry to Dounreay. I would suggest that many of the "Tartan Tories" now singing about Scotland fail to recognise the complexities of the tax.
    Broadly speaking, transferability of premiums back to manufacturing is the strongest element of economic stability. It is the stabilising unit which will keep us competitive in the international sphere and enable us to sell more. I had thought that this was easy to understand, but it must have failed to get across to hon. Gentlemen opposite, who never did believe in planning. At each General Election—1959, 1964 and 1966—we have had this continual bleating about redistribution from hon. Members opposite.
    Dame Irene Ward: I have come to the conclusion that this Amendment would most satisfactorily serve the North-East Coast, and therefore, on behalf of the North-East Coast, I add my words in support of it.
    During the debate, no one has spoken up to explain to the Chief Secretary that we on the North-East Coast dislike the Selective Employment Tax very much indeed. We feel that the benefits which have flowed from regional development, which was started with such success by my party, are likely to be very seriously impaired by this tax.
    I think that it was my hon. Friend the Member for Moray and Nairn (Mr. G. Campbell) who said that we on this side of the Committee had no confidence in the Chief Secretary. I should have thought that the right hon. Gentleman, with his wide professional experience, would have been alarmed that it has been said by Members on both sides that the detail of the tax hardly seem to be in line with the Finance Bill. The Bill has been badly conceived, is rotten from top to toe and was introduced at the last moment because the Chancellor could not persuade the Inland Revenue to accept
    1524
    responsibility for the Bill which he really meant to introduce.
    One cannot conceive of any responsible Government introducing a Finance Bill and at a very early stage having to introduce an overwhelming number of Amendments to bring some sense of purpose or stability into it. I mention the decisions taken on charities and agriculture. I notice the new Clause on shipbuilding. This all goes to show that the Bill had not been thought out in detail. When the Chief Secretary announced suddenly how pleased he was that the Committee had chosen selectivity rather than a payroll tax, 1 began to think that he should have a part in the new production of "Alice in Wonderland" on television. He has shown that he has not grasped what the Committee and the areas think about this tax.
    The hon. Member for Newcastle-upon-Tyne, East (Mr. Rhodes) made a vicious attack on the tax, not in this Chamber, but when he spoke in the North of England. He tore it to shreds. I would have preferred the hon. Member to have made his speech here. I will have a good look at the Division records in the morning, because he has a great habit of attacking his own Government root and branch outside the House of Commons and then the whole thing simply dissolves into lack of action.
    The Deputy Chairman: Order. The hon. Lady is getting a little far from the Amendment.
    Dame Irene Ward: I agree, Mr. Irving, but a great deal has been said rather far from the Amendment. I have made my point, however, so I will not go further.
    I should like an assurance and information from the Chief Secretary, if he can get his mind back to proper detail and fact, which I rather doubt after his exposition during the small hours of the night and the early morning. If, as we all fear on the North-East Coast—and I speak for a moment of my constituency, where I have a hotel, a tourist industry, above the average of retired people and a lot of charming and delightful landladies—the Selective Employment Tax affects the tourist industry, it would

    1525
    be helpful to have the Amendment in the Bill so that we could use it.
    No one has said a word about what the British Travel and Holiday Association, which is the spearhead of our tourist industry, has said either in private or in public to the Chief Secretary and the Chancellor of the Exchequer. I want to know whether in all these matters, whether they affect the tourist industry, industry in general, manufacturing industry or people in the service industries, the Chief Secretary has consulted the British Travel and Holiday Association. Did he have consultations about——
    The Deputy Chairman: The hon. Lady is completely out of order. This has no relevance to the Amendment. I must ask her to come back to it.
    Dame Irene Ward: I hate to disagree with you, Mr. Irving——
    The Deputy Chairman: I am sorry, the hon. Lady cannot disagree with me. She must come back to the Amendment.
    Dame Irene Ward: I am not disagreeing with you, Mr. Irving. I am disagreeing with the Chief Secretary. I repeat that, if all these most unfortunate developments occur on the North-East Coast, it would be valuable to have the Amendment in the Bill. It should be in order somehow, Mr. Irving, to explain what the difficulties might be, because a lot of people have explained what the difficulties will be. Everybody has explained about the Highlands and Islands, which are not specifically mentioned in the Amendment. We are all arguing that when things go wrong, as they are bound to do—the whole thing will be in chaos before long—we want a remedy within the Bill. That is what we are asking for by the Amendment.
    I want to know whether, if things go wrong with the tourist industry, the Chief Secretary will use the Amendment, if he agrees to have it in the Bill, and whether he has discussed the matter with the British Travel and Holiday Association, which, as I have said, is the spearhead——
    The Deputy Chairman: Order. The hon. Lady must relate her remarks to the
    1526
    fact that the selectivity is to be based upon unemployment. She is not doing that. May I ask her to do it?
    6.30 a.m.
    Dame Irene Ward: Yes, certainly. If selectivity is based on unemployment the tourist industry will disappear. We cannot have more totality than the disappearance of the tourist industry. But the fact is that total unemployment can be limited—that was the word used so often by the Chief Secretary, who talked a lot about totality, and totality in damage to the tourist industry certainly can arise.
    Therefore, it is tremendously important that we have this Amendment to the Bill, to deal with this totality—though, of course, I fully realise that I am using "totality" in a sense different from that of the Chief Secretary. That is the difference between us. His totality is in favour of Government policy. My totality is in pointing out that, unless we have some amelioration by acceptance of this Amendment—and, after all, this is probably our last chance to get amelioration—unless we have the protection which this Amendment would give, we shall have nothing. Indeed, it will be the tourist industry which will go into the tourist world naked; there will be nothing to protect it.
    What I want to know from the Chief Secretary, in relation to this Amendment we are arguing for with such emphasis, is whether he will please explain, whether it will be acceptable to the British Travel and Holidays Association. I want to know how many experts agree with him. I will go through the whole lot, if you like, because, after all, the Chief Secretary read out a whole lot of things which the Government are supposed to have done for the development areas. Though they did not relate to this Amendment they were read out in great detail. What I want to know is whether the experts agree with him. Will the Chief Secretary, when he replies, say whether he consulted the experts, so that we may know whether the experts agree with this side of the Committee or whether they agree with the Chief Secretary? If I know the British Travel and Holidays Association—which I do—I am sure it will not agree with the Chief Secretary on this Amendment.

    1527
    Therefore, I hope that the Chief Secretary will give to the North-East Coast, to Scotland, and to all the other areas whose case we, their representatives here, are putting tonight, some protection against the absolutely wild folly of this ridiculous Finance Bill.
    Mr. Donald Dewar: I want to intervene, very briefly, in the debate at this ridiculous hour of the morning, because I have been a bit distressed by the proceedings. I have been, so to speak, drowned by the wave of demands coming from the benches opposite, and almost crushed by the great mass of their irrelevancies.
    I was particularly aggravated by the hon. Member for Moray and Nairn (Mr. G. Campbell) who, I think, ought to have known better. I listened to his speech with particular attention, and at the end of it I could not have told you which Amendment he was speaking to. I gathered that the hon. Member was speaking about the Selective Employment Tax; I gathered, also, that he did not like the tax for one or another of three reasons. They were all the same, but he repeated them several times.
    Mr. Gibson-Watt: That comes very badly from any hon. Member on that side of the Committee, because if the hon. Member had listened to the last speeches from his side he would have noticed that they were entirely a repetition of the election results in Scotland.
    Mr. Dewar: That may be so, but I prefer to concentrate on the speeches on the hon. Member's side of the Committee at the moment.
    I was coming to the reasons the hon. Member for Moray and Nairn gave in support of the Amendment. The first was that he did not like the Selective Employment Tax basically because it was selective. He said that he preferred a payroll tax which would apply over the whole country. He objected to the idea of selection which discriminated against certain districts and. particularly, against certain industries.
    Listening to large sections of the hon. Gentleman's speech, one would have thought that the Amendment was one dealing specifically with the tourist trade. He went on to say that the tax would
    1528
    become known as the Scottish emigration tax, and it is largely because of that that I find myself on my feet.
    One thing which the Amendment does is to be selective within the development districts. It provides a built-in safety clause for those areas with high unemployment. However, there are large parts of the development districts which have low unemployment, but which are particularly in need of help. My own constituency is part of an area where unemployment is 1·6 per cent. There are other areas where emigration is heavy but where unemployment is lower than it has been for many years and may drop even further. Yet such places will not get the benefit of this escape clause.
    If the Amendment is accepted, there will be a vicious sort of selectivity built in within the development districts which will put us back years in our whole programme of regional development.
    It was embodied and enshrined back in the Local Employment Act, and it took the Labour Party years of propaganda to get it into the heads of some hon. Gentlemen opposite that it was a vicious and unfair principle. I should have thought that we would have succeeded by this time. Now we get hon. Members opposite putting it forward in a slightly different guise because they are only anxious to make, under a new Amendment, the same speeches that they hoped to make on a different Amendment earlier in the evening. They have failed to address themselves to the problems which their Amendment raises.
    If this discriminatory Amendment is passed, it will destroy the whole point of the Selective Employment Tax, which is that at least in the development districts everyone is to be on the same basis. It will put back the concept of regional development further than it would be put by the Selective Employment Tax, supposing that it were as vicious as it appears to the distorted imaginations of the most bigoted hon. Gentlemen opposite.
    I hope that my hon. Friends will combine to throw out the Amendment.
    Mr. James Davidson: Hon. Members on the Liberal benches have been accused of being somewhat inconsistent in their views about the way to tackle the Selective Employment Tax. My hon. Friend the

    1529
    Member for Roxburgh, Selkirk and Peebles (Mr. David Steel) outlined clearly the basis of Liberal policy, and that was choice No. 1. Our own Amendment was choice No. 2. Now we come to this pale shadow of an Amendment, which is third best. We on these benches would find it difficult to oppose it, but I cannot say that I think very much of it.
    I noticed a considerable quantity of inconsistency from behind me. Among other things, there seems to be a nostalgia for a return to the Local Employment Act of 1960. Hon. Members of the Opposition seem to wish to oppose the investment incentives Bill, with its 40 per cent. grants, and the expansion of the development districts into development areas. Yet they have been talking about development areas largely as if they were their own idea. They have been talking about regional development as if it was something which they supported all along. It is something about which we never heard from the Tory Party for many years.
    Over two years ago, I raised a Liberal committee in the North-East, and we produced a plan for the North-East. We put a lot of hard work into it. One of the things that we proposed was that the North-East of Scotland should be made a development area. When I talk about the North-East, I mean the North and the East, not the North-East Coast, which is about the middle of England.
    Mr. Ernest Armstrong: On a point of order. Should not this be transferred to the Scottish Grand Committee?
    The Deputy-Chairman: That is not a point of order.
    Mr. Davidson: The hon. Gentleman can go out and have his breakfast if he wants to.
    As I was saying, we proposed that the whole of the North-East should be made a development area. We are delighted that this has been done, but I must repeat what has been said already, that this tax is working in direct opposition to the development area policy, and I cannot believe that this is not clear to right hon. Gentlemen on the Front Bench opposite.
    1530
    In the North of Scotland we have five or six different bodies working for regional development. There is the North-East Planning Council, the North-East Development Committee, the North-East Consultative Group, a representative office of the Scottish Council of Development and Industry, and so on. All these bodies advise and discuss and get practically nowhere. Why not have a development board for the area such as the Government have set up for the Highlands? Why not have one such board for other parts of the United Kingdom which need it? I make this plea because this possibly is the last chance to do so on this Bill.
    I wish to raise some points which have been raised with me in letters from my constituents. The question of village bakeries has been raised. They are disappearing fast, and the point has been made that where a bakery is making bread for human consumption it is to be regarded as a manufacturing industry, but if there is a shop attached it is not to be categorised as such. This seems to be a strange discrimination.
    I refer next to agricultural trainees. For years we have been asked to train people for work in agriculture. We were asked to do this when the Tories were in power, and we have been asked to do this by the present Government. Here I must declare an interest, in that for the last 10 years or so I have been a practical farmer. As a result of this tax it will not pay anyone to train people. In fact, one can expect to be paid by them for the training they receive.
    Reference has been made to part-time workers, and I am thinking particularly of the part-time forestry worker and crofter. There are more crofts and small farms in Aberdeenshire than there are in the whole of Caithness and Sutherland, a fact which is not often realised. There are many crofters who work part-time as unestablished forestry workers. If this tax is to apply to them in their part-time employment with the Forestry Commission, or with the owners of private forests, they will lose their jobs. In fact, many of them have already lost them. It may be that when the proprietors concerned realise the intricacies of this Bill, and appreciate that forestry is excused from the tax, they will start taking some of these men back, but at the moment they are losing their jobs.

    1531
    The point has already been made about the effect—and this will cause unemployment and, therefore, is connected with the Amendment—on the theatre in provincial areas. In Aberdeen, there is only one major theatre and I have a letter to the effect that when this tax comes into force it is more than likely that this theatre will have to close down. It is the only theatre in the North of Scotland which provides a continuous programme on the stage and even this often has to give way to cinema.
    6.45 a.m.
    A point which I would like to mention briefly is the effect of the tax on smaller farmers. I know that they will get it back, but they will have to wait for a long time. The average size of a farm in my area is under 100 acres and those who know anything about farming will realise that this means a one man plus farm—one man plus a part-time worker, usually at the weekend. If these farmers have to pay the tax on these part-time workers, even if they can claim it back later, it will be a great hardship to many of them. Most of them have bank overdrafts on which they are paying 7 or 8 per cent., and yet they will have to make an interest free loan to the Chancellor.
    Mr. Dewar: The hon. Member is launching a general attack on the Selective Employment Tax and has grudgingly indicated that he will support the Amendment. Does he not agree that his area is one of high emigration and low unemployment and that it will be disadvantaged compared with other development areas in Scotland? How can he reconcile that with his support for the Amendment?
    Mr. Davidson: This is the third Amendment which we have put forward, as the hon. Member for Aberdeen, South (Mr. Dewar) will know, and it is our third choice of Amendment which would have had the effect of taking account of the emigration as well as unemployment. This is one of my criticisms of the Amendment. Although in principle we would find it difficult to vote against it, it does take account of emigration.
    Mr. Bruce-Gardyne: Will the hon. Gentleman give way?
    Mr. Davidson: I have just about finished. It is for the Chair to rule who speaks next.
    Mr. MacArthur: I would like to call further attention to the shocking absence from our debates of any Scottish Minister. I can well understand that the Secretary of State for Scotland may well be engaged in his official duties in Edinburgh this week, in view of what is happening there, but it is inexcusable that the Minister of State should not be here; and neither is either of the two Joint Under-Secretaries. It is all the more inexcusable as the Chancellor himself directed Conservative Members to the Secretary of State when we wished to make protestations about the effect of the tax on Scotland.
    I am glad that the Chancellor has been here although I am not sure whether I am glad or sorry that the First Secretary is not here. He is responsible for development districts and should be here, but whenever he comes it is to gag us and suppress freedom of speech so perhaps, on balance, I welcome his absence.
    Sir D. Glover: I think that the Chancellor has had the right hon. Member for Belper (Mr. George Brown) locked in the Clock Tower until the end of the debate.
    Mr. MacArthur: A number of hon. Members on the other side from Scottish constituencies have taken part in the debate and this is the second occasion on which I have had the pleasure of hearing the hon. Member for Aberdeen, South (Mr. Dewar) trying to justify the Selective Employment Tax—a point which, no doubt, his constituents will note. The hon. Member for Dundee, West (Mr. Doig) paid a splendid tribute to my right hon. Friend the Member for Argyll (Mr. Noble) and his predecessors and colleagues when he described how much unemployment in Dundee had fallen.
    Mr. Doig: Under this Government.
    Mr. MacArthur: The fall in unemployment in Dundee has been steady over the last few years as a direct result of the measures taken by a Conservative Government which have produced a steady drop in unemployment in Scotland and particularly in Dundee. The Labour Government, as the hon. Member knows quite well, have produced nothing in terms of planning or installing factories which are already producing any jobs in Scotland.
    Mr. Doig: Unemployment went up considerably under the Conservative Government on many occasions. Since the Labour Government came to power there has been less in every month than in the same month in the previous year.
    Mr. MacArthur: The hon. Member fails to take the point, which does not surprise me. Of course there were fluctuations from month to month, but the trend was downwards. If he looks at the factories in his constituency he will see that they are a tribute to the work of the Conservative Government.
    The problem to which the Amendment refers is the higher rate of unemployment in Scotland which has followed the decline in the old industries before the build-up of new industries. The work has gone ahead quickly in the last few years and we hope that one effect, in the end, will be to reduce emigration abroad and the migration south of young people in Scotland who see little prospect of employment in their own country and who are lured away by the promise of higher wages and better opportunities in the Midlands and South.
    Against this background the service industries have a vital role to play. First, they are large employers in their own rights, employing in Scotland over half the population. Second, their further development can act as a generator of industrial growth. Yet these are the industries which the S.E.T. hits hardest. In January this year the Government published a White Paper, The Scottish Economy 1965 to 1970, a Plan for Expansion. In the Chapter headed, "The Service Industries", paragraph 124 reads:
    "Adequate and up-to-date services are important if Scotland is to be an attractive area for incoming industrialists. A satisfactory background of basic services and recreational facilities, good shops and adequate transport, schools and medical services—these are all things which may influence industrialists when they are considering factory locations. The service industries, therefore, have a major rôle to play in the build-up of modern manufacturing industry and in the reduction of emigration from Scotland."
    This was published by the Secretary of State in January of this year.
    Paragraph 143 reads:
    "The Government is conscious of the rôle which the service industries have to play in the expansion of the Scottish economy. In addition to the contribution which certain of
    1534
    them make directly to economic growth, they help provide the basic pre-requisites for industry as well as providing the facilities and opportunities which go with a rising standard of living. They also play an important part in influencing both the capacity to restrain migration and the ability to attract new industry."
    Here is all the more reason for not subjecting the service industries in the development areas to the full rate of the S.E.T.
    Special attention was given to tourism in that White Paper. Indeed, there were constant references to the importance of tourism to the economy of Scotland. We are now told that the problems facing the tourist industry are being examined by the Government. The Minister of State, Board of Trade, said in Standing Committee the other day that something must be done to help certain sections of the hotel and catering industry. We have had similar statements today.
    I do not have much faith in these declarations of good intent. What do they mean? We had another reference in the White Paper—[HON. MEMBERS: "Oh, no."] It is time that hon. Gentlemen opposite were reminded of what their Government have said. They must listen to their words and eat them. On page 8 of the White Paper it was stated that special attention would be given to tourism. What special attention has been given? First, the investment allowances were withdrawn and now the industry is having S.E.T. imposed on it.
    I welcome the enthusiasm which Liberal hon. Members have made expressing for tourism. This is in contrast with the way in which they trooped into the Government Lobby not long ago in support of the White Paper which proposed the complete withdrawal of investment allowances from the industry.
    Mr. David Steel: The hon. Gentleman may recall that in the debate on that Bill we indicated that we wanted the tourist industry to be included for the new investment grants, but that, in principle, we accepted it as a considerable extension from the old development district scheme which we had under the Conservatives. My constituency benefited not at all under the Conservative Government.
    Mr. MacArthur: Whatever the hon. Gentleman may or may not have said

    1535
    during the debate on that Bill, I am referring to what hon. Members of the Liberal Party did months before the Bill, when they voted for the White Paper removing the investment allowances. I do not recall any such qualification then. When they realised the enormity of what they had done, they tried to find a way out later.
    Tourism depends on part-time workers, and S.E.T. will hit the industry hard because of that. The industry is not overstaffed but understaffed, so that S.E.T. is irrelevant to the labour situation in the industry. If the tax in the development areas forces people out of the services industries, where will they go? There is no alternative manufacturing employment in many parts of Scotland. If they are squeezed out of employment in the service industries, some will find employment in manufacturing—but in England and not in Scotland—while others will simply become unemployed through losing their jobs, and we have heard a lot about that.
    The part-time worker who will suffer most is less mobile than other workers. Often she is the married woman who cannot leave her husband and family and join the march South to find work. The social consequences of this tax are serious indeed for Scotland. If hotels do not reduce their staff—remembering that they must hold their staff if they are to keep up the standard of service they must offer—they will, it is estimated, have to increase their charges by 10 per cent. and this will have a serious effect on their ability to compete.
    It is already cheaper to take a fortnight's holiday with B.E.A. from London to the Costa Brava than it is to take a fortnight's holiday with B.E.A. in Argyll. S.E.T. may well make this difference even greater. [Interruption.] I wish that the hon. Member for Coatbridge and Airdrie (Mr. Dempsey) would rise to his feet if he wishes to intervene, and not sit there mumbling.
    Mr. James Dempsey: I was saying that the hon. Gentleman is making a rather wild statement without producing the facts of the relevant costs.
    Mr. MacArthur: I do not have the precise figures with me, but I assure the
    1536
    hon. Gentleman that he will find them in B.E.A.'s holiday brochure in the transport office. He will see that the difference in cost between going to Argyll for a fortnight from London is £1 or £2 more than spending a fortnight on the Costa Brava.
    This tax will increase this difference even more. This will mean, first, that the English visitor to Scotland will find it more attractive financially to go abroad, which will add a charge to our balance of payments, while, secondly, the overseas visitor coming to Europe will find it more attractive financially to go to Spain or Italy than to come to Scotland. Thus, we may lose both English and foreign visitors to Scotland. Only under a Labour Government do we lose on the swings and also lose on the roundabouts.
    7.0 a.m.
    I ask the Chancellor how he reconciles this tax with what has been said for months by the Government about the importance of the service industries in Scotland? How can this tax further the work of the Highlands and Islands Development Board? Will he tell us how this tax will help forestry in the North? How will it help the growth of the tourist industry? How will it solve the labour shortage in the construction industry? How will it promote the development of agriculture? All these are critical questions and all were thought to be part of Government policy in view of the declarations by the Government in the last few months. Now they have been shown by this tax to be a sham.
    My hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) referred to the first paragraph of the White Paper on the Scottish Economy and gave figures showing the Government's targets in January for increased employment in Scotland. The paragraph told us that 130,000 new jobs would need to be created by 1970 to take account of the loss of employment in the older industries and provide a net overall gain in employment. Of those 130,000 jobs, the White Paper told us, 50,000 would be in manufacturing industry, 20,000 in the construction industry and 60,000 in the service industries. Thus, 50,000 jobs were to be in manufacturing industry, and a total of 80,000 in the service industries.
    A few days ago I asked the Government, and did not get a reply, what

    1537
    changes they intended in this forecast. I presume that the White Paper was written before the Selective Employment Tax was dreamed up. I cannot believe that in January the Secretary of State for Scotland or anyone else thought that there would be a Selective Employment Tax. Indeed, the whole nature of the tax shows that it has been a rushed and botched job. Can the Chancellor tell us what effect the tax will have on this forecast? If, as we are constantly assured, one purpose of the tax is to squeeze people out of the service industries into manufacturing industries, the Secretary of State's forecast can no longer hold good. It has been overtaken by events not within the control of the Secretary of State.
    There is a serious problem here. If the Chancellor maintains that the forecast of employment in Scotland in 1970 is not changed but holds good, that in itself is a complete reason for getting rid of the Selective Employment Tax in Scotland.
    Mr. MacDermot: We have been discussing this Amendment for am hour and three-quarters now. In its scope it is very similar to the Amendment we discussed previously at rather greater length. That Amendment dealt with development areas in general. This Amendment is confined to one aspect of what it describes as regional planning areas—to summarise it—which have a higher level of unemployment.
    We have had many speeches from hon. Members representing Scottish constituencies. They have treated this as if it were, on the face of it, a Scottish debate. But I would remind them that there is nothing in the terms of the Amendment to confine it to Scotland. We had a contribution from the hon. Lady the Member for Tynemouth (Dame Irene Ward), perfectly in order, of course, speaking on behalf of the interests of the North-East.
    I would only say to those hon. Members who complain about the absence of the Scottitsh Minister that if they had wanted, as they apparently did, to turn this into a specifically Scottish debate, the normal practice would have been to intimate that fact through the usual channels, and the usual arrangements could have been made. I apologise to
    1538
    hon. Members opposite if they have to put up with a mere Irishman replying to a Scottish debate. Of course, there could have been a large number of speeches from hon. Members from Northern Ireland on this Amendment. They have a problem of high unemployment. But, of course, their particular problems are the subject of other Amendments which have been selected later. So, I would say with respect, are a good many of the matters which have been canvassed during this debate, and I propose to leave our arguments on them till we reach the appropriate Amendments.
    Having listened to the speeches made on the various Amendments which we have been discussing, I am led to conclude that all the arguments we get on the roundabouts are arguments which we also get upon the swings. I remember replying to a debate many hours ago dealing with the proposal to exempt the single or first employee. I remember hearing then the same arguments about the tourist industry in the Highlands, the single employee in the Highlands and the small industry in the Highlands, and I had that eerie feeling that I had been here before when I was listening to the arguments in the present debate.
    As I say, we have selected special groups of Amendments dealing with part-time workers and with the tourist industry, and we shall come to those, so I hope hon. Members will not think I am being disrespectful to their Amendments if I ask them to await with patience our answers when we come to those Amendments.
    Turning to the subject matter of this Amendment, the proposal that there should be a special exemption—it is put in the form of a rate of 1d., but in effect it is an exemption—for areas of high unemployment, I can summarise what I have to say shortly, because it is in effect the same answer as my right hon. Friend the Chief Secretary gave in the last debate, pointing out—I will not weary the Committee by summarising the points again—the many measures which have been taken to bring new employment and industry to these areas to assist development and to reduce unemployment in those areas.
    Hon. Members who have complained that there is not a Scottish Minister here

    1539
    have at least had the satisfaction of having their arguments ably answered by many of my hon. Friends representing Scottish constituencies and who have added, from their great knowledge and experience, to the list of matters which my right hon. Friend the Chief Secretary itemised in the last debate, giving chapter and verse of the very low figures of unemployment in the areas which they represent in Scotland, reminding the Committee of what the Government have done in such matters as the shipbuilding industry and the bringing of the Dounreay project to Scotland. We had from the hon. Member for Perth and East Perthshire (Mr. MacArthur) most important confirmation of this when he was arguing that the reduction in unemployment in certain of these areas was due to the policies initiated by the previous Government.
    Let us accept the hon. Gentleman's hypothesis for the moment. We need not argue about the extent to which those policies have been added to by the further policies since the present Government have been in power. But the point that he has made—which it is common ground is a valid one—is that as a result of the measures which have been taken to assist Scotland, the Scottish economy now is very much stronger than it was, and he is really conceding the point of the Chancellor which was attacked at the very outset of this debate by his hon. Friend the Member for South Angus (Mr. Bruce-Gardyne).
    It is precisely the difference between the state of the Scottish economy now and at the time when the right hon. and learned Gentleman the Member for the Wirrall (Mr. Selwyn Lloyd) introduced and legislated for, but never put into effect, his payroll tax, which explains why it has been possible for the Chancellor to introduce this tax now.
    This also relates to the point made by my hon. Friend in the very first intervention from this side of the Committee in this debate when he pointed out that if it is not to be this tax, and if the Chancellor is to find other forms of tax to raise the additional revenue which it is generally agreed on both sides he must do in his Budget, the alternatives are likely to weigh rather more heavily upon Scotland than does this tax.
    1540
    My hon. Friend drew particular attention to one of the possibilities, which was widely canvassed among those who speculate about what the Budget might be, and he pointed out what the damaging effect on Scotland might have been if there had been an increase in Purchase Tax relating to motor vehicles or an increase in the vehicle licence duty.
    When considering these general challenges to the Selective Employment Tax, we have got to judge the tax against possible alternatives, and the alternatives would have been likely to have more serious effects upon Scotland than hon. Gentlemen are fearing from this tax.
    Mr. Bruce-Gardyne: But would the hon. Gentleman not agree that because of the wording of this Amendment, if the Government's regional policies work as they say they will work, then the Amendment would not come into operation and there would be no need to create additional revenue?
    Mr. MacDermot: That point has been very ably answered by my hon. Friend, who pointed out that making an exemption as restricted as this is something that would undermine the whole regional development policy.
    The only final point I would make is just to challenge—so that it does not go unchallenged—the proposition that this Amendment as it stands is something which would be simple and easy to operate.
    I must make it clear, for reasons which will be familiar to hon. Members by now, that with the form in which this tax is now devised and raised through the addition to the National Insurance stamp, it would not be practicable for the kind of reasons I elaborated on an earlier Amendment to operate an exemption of this kind.
    But I again repeat what the Chief Secretary said in replying to the last debate—that the tax, by its nature, is one which as it is developed in the future, and, as more refined methods of administration can be introduced, is capable of considerable differentiation and selection. But for the reasons that have already been given, that is not possible this year, and the fears which hon. Member's have expressed in this debate, in our view, are wholly exaggerated and do not justify their criticisms.
    7.15 a.m.
    Mr. Noble: For several hours we have listened to debates connected with much the same subject, and, if it is a fault on the part of my hon. Friends who have taken part in this debate that they did not take part in the earlier ones, I hope that the Financial Secretary will excuse it. I saw seven or eight of my hon. Friends standing at every opportunity in the hope of getting in, but they did not have the good fortune to catch the eye of the Chair. [HON. MEMBERS: "And before the Closure, too."] Yes.
    The Financial Secretary returned to, though he did not quote again, the list of things which the Chief Secretary gave at the end of our last debate in an attempt to persuade us that it was the totality of measures which the Government were trying to take for the different regions which should be looked at and not the pernicious effect of this tax on its own. No one who has studied these matters as an economist or a specialist in any of the regions doubts what the effect of the tax will be on regional policy. But the attempt was made to say that so many things had been done that the pernicious effect of the tax would not be nearly so serious as we have said.
    We are told about the control of office building. This may at some stage be useful, but everyone who has seen what has actually been happening in the last few months knows that the office buildings are going not to the development areas and the places where we need them, but to the London periphery and the Sourh-East. The moving of the Post Office Savings Bank to Glasgow, and so on, was the result of action taken some years ago. There is no advantage to the development areas there.
    Mr. Callaghan Mr. Callaghan indicated dissent.
    Mr. Noble: If the right hon. Gentleman can tell me of some big office buildings which are going to the development areas, I shall gladly give him the opportunity.
    Mr. Callaghan: Not on this Amendment.
    Mr. Noble: I suspect that the Chancellor has to do some research in the hope of finding some. But these were the arguments which his colleagues put
    1542
    to the Committee, so we are entitled to ask questions about them.
    Next, the question of advance factories. If the rest of the country measures up at all to the pattern which has been seen in Scotland, the advance factories will be 90 per cent. in the central belt, in the very area where we do not at the moment need all this extra employment. These actions will be of no help in solving the problem.
    The Chief Secretary spoke of special help from the banks for the development areas. This is a point of the greatest importance in our future discussion on the tax. Will the Chancellor allow the banks to give overdrafts to meet the forced loans which many people will have to pay? We have not been told.
    If the Chief Secretary had attended the sittings of the Committee on the Industrial Development Bill, he could not have made the remarkably naive remarks he made about that Measure tonight. Plainly, he has not even read the reports of its proceedings. Over and over again, my hon. Friends and I, sometimes supported by hon. Members opposite, have moved Amendments exactly in line with the thoughts which have been in the mind of the Committee on this Amendment, and every time the President of the Board of Trade or the Minister of State has had to say that, even if he agreed with the sentiment, it was totally impossible to do anything about it. All the Government have told us about what they are doing to counterbalance the damage that the tax will do in these areas is words, not action. I am sure that my hon. Friends are right to have doubts about the Government's intentions.
    The hon. and learned Gentleman said that he had had a great deal of help from the benches behind him in confuting some of the arguments that had been made. What help did he have? He did not have a speech, as one might well have expected, from the hon. Member for Caithness and Sutherland (Mr. Maclennan), one of the people particularly involved, or one from the hon. Member for the Western Isles (Mr. Malcolm MacMillan). But every one of their constituents knows just how damaging this tax will be in their areas. He did not have a speech from the hon.

    1543
    Member for West Stirlingshire (Mr. W. Baxter), who tabled Amendment No. 360; though it has not been selected, I have no doubt that the hon. Member would not have given much comfort to the Financial Secretary.
    But the hon. and learned Gentleman got a speech from the hon. Member for Dundee, West (Mr. Doig), who said that he did not care whether the unemployment in Scotland was double the national average or not, a rather curious statement to put on the record even though he said that the thing that mattered to him was the number. Surely the hon. Gentleman resents very much—at least all his hon. Friends did when they were in Opposition—that Scotland should have double the national average.
    We got a lecture from the hon. Member for Aberdeen, South (Mr. Dewar), who came into the Committee for a few moments and then gave us a tremendous amount of advice about how we should carry on our debates. He missed the whole point of all the arguments when he said that he resented this being called a Scottish emigration tax. If he knew his own area—he may well not, because he comes from a good distance away from it—he would know very well that the problem in the North-East is the steady emigration of the skilled and best people from the area.
    Mr. Dewar Mr. Dewar rose——
    Mr. Noble: I will give the hon. Gentleman a chance in a moment. He must allow me to develop my argument before he attempts to demolish it.
    The hon. Gentleman said that selectivity was absolutely essential and that if we had development areas with a higher rate of selectivity and, thus, advantages over other parts, it would wreck the whole scheme. He said that within the development area everything had to be the same. [Interruption.] Is the hon. Gentleman trying to put his case in a different form?
    Mr. Dewar: I recognised that the problem in my constituency was emigration, but because it is emigration, I am blessed in a back-handed way by having a very low unemployment rate. The Amendment—we are discussing that and not the Selective Employment Tax—
    1544
    would particularly victimise my constituency, which would be at a considerable disadvantage compared with other development areas.
    Mr. Noble: That is almost exactly the same argument as the hon. Gentleman used before. The point that he is in grave danger of missing—it is a very valid one in Scotland as a whole—is that in a situation where we have the whole of Scotland, with one small exception, as a development area the incentives for industry to settle in the middle are now very much greater than they have ever been before. Under other action which the Government have taken, and particularly under the impact of this tax and the withdrawal of the investment allowances, transport costs in Scotland have risen and will rise very greatly. Thus, the opportunity for industries to go to places like the hon. Member's area and settle there are much less than before. His area is in grave danger of suffering severely.
    Mr. Dewar: The right hon. Gentleman is avoiding the point. He is again making a general point about the tax, which may or may not be valid, and is avoiding argument about the Amendment, which would make worse the dangers he accurately describes.
    Mr. Noble: I do not think that I can go on with this ad infinitum, but that is not necessarily so. The hon. Gentleman quoted one way in which it could happen. I am arguing that it is much more important to attract industry to development areas, perhaps with special help such as could be given by this tax, rather than to pursue the present policy of the Government which, if unwillingly, they are trying to persuade the Committee they are forced to follow.
    When we come to other parts of the Bill there will be opportunity for points which the Government have not answered to be followed up, so I will not ask the Financial Secretary to go into them now. But I do ask him to bear in mind that, at some stage during the proceedings of the Bill, it will be the duty of the Government to tell us categorically what their estimate is of the cost of this tax to certain specified areas.
    The calculations I have heard made for the Highlands range between £1½ million and £4½ million. No one can tell

    1545
    us what is the best calculation at the moment. I asked the Chairman of the Highland Development Board last Friday and he said that he had been unable to get any accurate calculation. Whether the Government like it or not, it is true that, at least for the next six or nine months, a great deal more money will be drawn out of these areas than they can reasonably stand.
    The hon. and learned Gentleman said that, of course, the Government had to raise revenue. Both he and the Chief Secretary have, as usual, asked us how else we would have raised it. Perhaps it might have gone on to transport and if
    so, those of us living in outlying parts of the country would have disliked that, perhaps, even more.
    The fact is simple. The money had to be raised—perhaps—but there were many other ways in which it could have been raised with very much less damage to development areas and to the employment situation within them. That being so, we will, I know, want to divide the Committee.
    Question put, That those words be there inserted: —
    The Committee divided: Ayes 90, Noes 134.

    Division No. 67.]

    AYES

    [7.28 a.m.

    Allason, James (Hemel Hempstead)

    Griffiths, Eldon (Bury St. Edmunds)

    More, Jasper

    Astor, John

    Grimond, Rt. Hn. J.

    Munro-Lucas-Tooth, Sir Hugh

    Baker, W. H. K.

    Hamilton, Marquess of (Fermanagh)

    Murton, Oscar

    Batsford, Brian

    Hastings, Stephen

    Noble, Rt. Hn. Michael

    Bitten, John

    Hawkins, Paul

    Nott, John

    Biggs-Davison, John

    Higgins, Terence L.

    Page, Graham (Crosby)

    Black, Sir Cyril

    Hiley, Joseph

    Pardoe, J.

    Blaker, Peter

    Hirst, Geoffrey

    Peel, John

    Boyd-Carpenter, Rt. Hn. John

    Hordern, Peter

    Perclval, Ian

    Boyle, Rt. Hn. Sir Edward

    Howell, David (Guildford)

    Pink, R. Bonner

    Brinton, Sir Tatton

    Hunt, John

    Pounder, Rafton

    Brown, Slr Edward (Bath)

    Iremonger, T. L.

    Price, David (Eastleigh)

    Bruce-Gardyne, J.

    Jenkin, Patrick (Woodford)

    Pym, Francis

    Campbell, Cordon

    Jopling, Michael

    Ramsden, Rt. Hn. James

    Channon, H. P. G.

    Kimball, Marcus

    Renton, Rt. Hn. Sir David

    Chichester-Clark, R.

    King, Evelyn (Dorset, S.)

    Ridley, Hn. Nicholas

    Clark, Henry

    Kirk, Peter

    Roots, William

    Clegg, Walter

    Kitson, Timothy

    St. John-Stevas, Norman

    Cooke, Robert

    Langford-Holt, Sir John

    Scott, Nicholas

    Davidson, James(Aberdeenshire, W.)

    Longden, Gilbert

    Sharples, Richard

    Deedes, Rt. Hn. W. F, (Ashford)

    Loveys, W. H.

    Steel, David (Roxburgh)

    Dodds-Parker, Douglas

    Lubbock, Eric

    Thatcher, Mrs. Margaret

    Eden, Sir John

    MacArthur, Ian

    Turton, Rt. Hn. R. H.

    Fortescue, Tim

    Mackenzie, Alasdair(Ross&Crom'ty)

    Ward, Dame Irene

    Foster, Sir John

    Maclean, Sir Fitzroy

    Weatherill, Bernard

    Gibson-Watt, David

    Macleod, Rt. Hn. Iain

    Webster, David

    Glover, Sir Douglas

    McMaster, Stanley

    Whitelaw, William

    Goodhart, Philip

    Maude, Angus

    Wlnstanley, Dr. M. P.

    Goodhew, Victor

    Maxwell-Hyslop, R, J.

    Gower, Raymond

    Mills, Peter (Torrington)

    TELLERS FOR THE AYES:

    Grant, Anthony

    Miscampbell, Norman

    Mr. David Mitchell and Mr. Younger.

    NOES

    Allaun, Frank (Salford, E.)

    Conlan, Bernard

    Foley, Maurice

    Allen, Scholefield

    Corbet, Mrs. Freda

    Ford, Ben

    Archer, Peter

    Crawshaw, Richard

    Fraser, John (Norwood)

    Armstrong, Ernest

    Cullen, Mrs. Alice

    Gardner, A. J.

    Bagier, Cordon A. T.

    Dalyell, Tarn

    Gordon Walker, Rt. Hn. P. C.

    Barnes, Michael

    Davidson, Arthur (Accrington)

    Gregory, Arnold

    Beaney, Alan

    Davies, Dr. Ernest (Stratford)

    Griffiths, David (Rother Valley)

    Bern, Rt. Hn. Anthony Wedgwood

    Davies, G. Elfed (Rhondda, E.)

    Griffiths, Will (Exchange)

    Bennett, James (G'gow, Bridgeton)

    Davies, Ifor (Gower)

    Hamilton, James (Bothwell)

    Binns, John

    Davies, Robert (Cambridge)

    Hamilton, William (Fife, W.)

    Bishop, E. S.

    Delargy, Hugh

    Hannan, William

    Blackburn, F.

    Dempsey, James

    Harper, Joseph

    Booth, Albert

    Dewar, Donald

    Hazell, Bert

    Bray, Dr. Jeremy

    Diamond, Rt. Hn. John

    Heffer, Eric S.

    Brooks, Edwin

    Dickens, James

    Henig, Stanley

    Brown, Rt. Hn. George (Belper)

    Doig, Peter

    Hooley, Frank

    Brown, Hugh D. (G'gow, Provan)

    Dunnett, Jack

    Hoy, James

    Brown,Bob(N'c'tle-upon-Tyne,W)

    Dunwoody, Mrs. Gwyneth (Exeter)

    Hughes, Emrys (Ayrshire, S.)

    Brown, R. W. (Shoreditch & F'bury)

    Dunwoody, Dr. John (F'th & C'b'e)

    Hunter, Adam

    Callaghan, Rt. Hn. James

    Eadie, Alex

    Hynd, John

    Carmichael, Neil

    Edelman, Maurice

    Jackson, Peter M. (High Peak)

    Coe, Denis

    Edwards, Robert (Bilston)

    Jenkins, Hugh (Putney)

    Fernyhough, E.

    Johnson, James (K'ston-on-Hull, W.)

    Coleman, Donald

    Finch, Harold

    Judd, Frank

    Lestor, Mist Joan

    Orme, Stanley

    Silverman, Julius (Aston)

    Lever, Harold (Cheetham)

    Owen, Dr. David (Plymouth, S'tn)

    Slater, Joseph

    Lomas, Kenneth

    Parker, John (Dagenham)

    Small, William

    Loughtin, Charles

    Pavitt, Laurence

    Summerskill, Hn. Dr. Shirley

    Lyon, Alexander W. (York)

    Pentland, Norman

    Taverne, Dick

    MacDermot, Niall

    Perry, Ernest G. (Battersea, S.)

    Tinn, James

    Macdonald, A. H.

    Perry, George H, (Nottingham, S.)

    Urwin, T. W.

    McGuire, Michael

    Prentice, Rt. Hn. R. E.

    Walden, Brian (All Saints)

    McKay, Mrs. Margaret

    Price, Christopher (Perry Barr)

    Walker, Harold (Doncaster)

    Mackenzie, Gregor (Rutherglen)

    Redhead, Edward

    Watkins, David (Consett)

    Mackie, John

    Reynolds, G. W.

    Wellbeloved, James

    Maclennan, Robert

    Robertson, John (Paisley)

    Wells, William (Walsall, N.)

    McNamara, J. Kevin

    Robinson, W. O. J. (Walth'stow, E.)

    Whltaker, Ben

    Mapp, Charles

    Roebuck, Roy

    White, Mrs. Eirene

    Mendelson, J. J.

    Rogers, George

    Whitlock, William

    Moonman, Eric

    Rose, Paul

    Williams, Clifford (Abertillery)

    Morris, Alfred (Wythenshawe)

    Ryan, John

    Winnick, David

    Morris, Charles R. (Openshaw)

    Shaw, Arnold (Ilford, S.)

    Winterbottom, R. E.

    Mulley, Rt. Hn. Frederick

    Shore, Peter (Stepney)

    Woof, Robert

    Oakes, Gordon

    Short,Rt.Hn.Edward(N'c'tle-u-Tyne)

    Ogden, Eric

    Silkin, John (Deptford)

    TELLERS FOR THE NOES:

    O'Malley, Brian

    Silkin, S. C. (Dulwich)

    Mr. Grey and

    Mr. Walter Harrison.

    Mr. Callaghan: I beg to move,
    That the Chairman do report Progress and ask leave to sit again.
    I can understand the jubilation of the right hon. Member for Enfield, West (Mr. Iain Macleod). Looking back 12 months, however, if we had thought that there was any conceivable possibility of having a majority of 44 in a Division, we should have thought that we were well away—and we still think that.
    This is a good time to report Progress. It is time that we gave the Opposition an opportunity to recharge their batteries and to find some fresh arguments. In view of the tedious arguments which we have been listening to, repeated time after time, it is only fair that they should have an opportunity to think up something a little new to beguile the time.
    Mr. Iain Macleod: It is very dangerous to make statements like that. There is no reason why we should not debate this Motion for another two hours until the First Secretary arrives, tired as usual from his labours, and bullies the Deputy Chief
    1548
    Whip into doing something he does not want to do; and then everybody gets very bad tempered with everybody else.
    The Government's majorities have been very small. I do not make too much of that point. The arguments from this side of the Committee have been both concise and admirably phrased. The only thing which has gone wrong has been the consistent attempts of the Government and of the Government Chief Whip to closure the debates even on such important matters as development and the problems of the sick and disabled. If he had not just been beaten to the gun, he would have closured the debate on the last Amendment concerning the key development districts with relatively high rates of unemployment.
    I suggest to the Chancellor that, after his experience yesterday, a certain amount of humility may help in making progress with the Bill.
    Question put and agreed to.
    Committee report Progress; to sit again this day.

    WATER SUPPLIES, MANCHESTER
    Motion made, and Question proposed, That this House do now adjourn.—[Mr. Charles R. Morris.]
    7.40 a.m.
    Mr. Alfred Morris: I am grateful to my right hon. Friend the Minister of Housing and Local Government for being present at this hour of the morning to reply to the first Parliamentary debate on Manchester's water needs since the somewhat repetitive and rather eccentric debate held in another place on 9th February, 1962.
    First, I should like to congratulate my right hon. Friend on the judgment he has made concerning Manchester's application to abstract water from Ullswater and Windermere. It is less easy to congratulate him on the time he took to reach that judgment, although I well understand the difficulties which faced him on a subject about which there has been such conflict between emotion and logic. My right hon. Friend will know that Manchester has readily given the assurance about public access to Hawes-water which was asked for in paragraph 36 of the decision letter. I hope that there will thus be no further delay in making and laying the Order before Parliament.
    For my part, what I found disconcerting about the decision letter was its insistence on 1980 as the date by which another major source of water ought to be available to be brought into use. In paragraph 36 of the letter, the proposals to allow water to be taken from Ullswater and Windermere are said to be designed to meet the Manchester water undertaking's needs "until 1980 or thereabouts". The letter also appears to accept the assumption that between 1970 and 1980—and I quote from paragraph 6—
    "the demand on Manchester will increase no faster than at present."
    In my view, that it is an entirely wrong assumption.
    Manchester has been advised by consultant water engineers that there should be a margin of 10 per cent. of resources
    1550
    over demand to meet contingencies, and an estimate based upon the current trend of consumption shows that demand will overtake the yield of all resources, including the full Ullswater and Windermere proposals, by 1974 or 1975.
    Of course, we have not been given the full Ullswater and Windermere proposals. My right hon. Friend's decision on the City's draft Water Order will have the effect of reducing the supply from Ullswater from 25 million gallons a day to 20 million gallons a day, with the result that it would seem prudent to take 1974, or even 1973, as the year when another major source of supply should be available for use.
    Moreover, if we are not to have a serious and avoidable water shortage in the mid-1970s, the new source should be identified this year. I emphasise this because, as the experience of both Liverpool and Manchester has shown, it takes a minimum of three years to design a scheme and obtain authority and a minimum of five years to acquire all the lands and easements and carry out the work of construction.
    The idea that the demand upon Manchester will increase no faster than at present is not only myopic. It is also utterly inconsistent with our plans for sustained economic growth. It has been estimated that about 3 million people already rely, directly or indirectly, on water supplied by the Manchester undertaking. Manchester quite literally "carries the can" for more than two dozen of its neighbouring authorities in the North-West. As population increases, as standards of living improve and industry demands more and more water, the quantity available must be stepped up.
    With more sophisticated production techniques and the expansion of such industries as chemical manufacturing and food processing the requirement is for water of a high and constant quality. The importance to the north-west region of having an adequate supply of water available wherever it may be needed has frequently been demonstrated. The availability of assured supplies for many years ahead is often a key factor in the location of new industry, or in the expansion of existing industry, with consequent benefit to the region.

    1551
    Where, then, is Manchester's major new source of supply to be found? In the proposed estuarial barrage schemes? My right hon. Friend the Minister of Land and Natural Resources, in reply to a Question on 23rd May, told me that even on the most optimistic assumptions a barrage scheme at Morecambe Bay would not make water available till the early 1980s. Neither this nor desalination will provide the answer to the problem I have outlined.
    It is, however, interesting to compare my right hon. Friend's reply of 23rd May with the statement made by the late Lord Birkett, when, in the last Parliamentary debate on Manchester's water needs, he referred to the possibility of distilling seawater as
    "something which is just around the corner".
    Manchester's leading adversary was as badly wrong in saying this as he was in stating that the Ullswater and Windermere proposals were of no urgency, when he went on:
    "I emphasised as strongly as I could the fact that there is no note of urgency about this matter at all".—[OFFICIAL REPORT, House of Lords. 8th February, 1962; Vol. 237, c. 236.]
    Very soon afterwards, in the spring of 1963, the Jellicoe Report was published and showed that the Manchester undertaking might have insufficient water to meet its obligations at any time after 1965. It went on to agree that the city should make plans for the provision, possibly by stages, of an additional reliable yield of about 50 million gallons a day "as a matter of urgency". I put it to my right hon. Friend that it is now even more urgent to identify a major new source of supply this year. Indeed, urgency has rarely been more urgent.
    At the meeting my right hon. Friend attended with representatives of the Manchester City Council on 26th May it was agreed that, since Morecambe Bay or desalination would not be ready before 180, other works would have to be provided to meet the long-term needs of the North-West for water and that the Water Resources Board should now consider a limited number of possible schemes likely to be most suitable and prepare a list of possible schemes for consideration by the Minister in the autumn, so that a programme of investigations can then be planned. It was also agreed that Man-
    1552
    Chester would be kept in touch with progress through the Mersey and Weaver River authority. Manchester very much welcomes those agreed arrangements and would like to see the programme of investigations proceed as quickly as possible.
    I feel sure that my right hon. Friend can be relied upon to do all in his power to help. Water has the distinction of being a basic requirement of life and the No. 1 raw material of industry; and social and economic planning is about nothing if it is not about this. To recall a phrase used at the Kendal public inquiry, last June, the millions of people and the enormous industrial interests which rely on having water available cannot be expected to continue living "on a meteorological razor's edge".
    7.49 a.m.
    Mr. Michael Jopling: I am very grateful to the hon. Member for Manchester, Wythenshawe (Mr. Alfred Morris) for giving me the opportunity to say a few words in this debate, because the whole of Lake Windermere and part of Ullswater are in my constituency, and hence I am very much involved.
    This is not the time or the place to start a long discussion on the draft Manchester Water Order on which the Minister made his decision a few weeks ago. That, of course, was a short-term solution to the problem, as the Minister said in answer to a Question of mine on 16th May. He told me that he regarded one of the alternative schemes put up at the public inquiry as a possible long-term solution and the draft Order as a short-term one. Hence, I do not feel that the draft Water Order comes within the terms of the debate, which deals with the long-term needs.
    In passing, may I say that it is a very bad decision for the Lake District. It is one which would make the great Lord Birkett turn in his grave. Whether the Minister likes it or not, it means that Manchester would have a foot in the door of Ullswater, and, whatever he may say now or in the future, as he says in his decision letter, he cannot bind his successors under any circumstances. This is the part of the decision which gives rise to most fears and causes most concern in the Lake District.

    1553
    With regard to the long-term proposals and the long-term needs for Manchester, there is not and never has been a dog-in-the-manger attitude by those concerned with the Lake District. There is a great deal of floodwater which runs down to the sea from that part of England, and we must look very hard at the Solway proposal, as is happening already. There is a great deal of waste hydroelectric water which runs to the sea at that place, and it may well be that that waste hydro-electric water could provide the key to Manchester's long-term needs.
    There were alternative schemes put up at the public inquiry, as the Minister knows. I hope that those will be looked at properly in the time ahead. I am sure that the Minister, will tell us that the Water Resources Board will be looking at all these needs and at all the possibilities. I hope that he will tell us just what mandate the Water Resources Board will have in looking at the water resources of the north-west, and that he will tell us just how it will go about its business.
    The great objection to Manchester's approaches in the past has been that the city seemed to people in the Lake District to want water at the least possible cost, regardless of the amenities of the area. It is those amenities which are most jealously guarded by the people who live in the Lake District.
    Mr. Alfred Morris: I did not refer to amenity, but I hope that the hon. Member for Westmorland (Mr. Jopling) will take it from me that Manchester people are not against scenic beauty. They are as keen to preserve scenic beauty as anyone else and——
    Mr. Speaker: Order. We cannot have long interventions when a Minister is waiting to reply.
    Mr. Jopling: The one assurance that I would like from the Minister this morning is about the Winster Valley. That is one place at which Manchester has already made a set. While the Minister cannot bind his successors, we would like an assurance from him that, as long as he holds his present office, he will not be a party to having that magnificent valley flooded. We would like to know whether he agrees with Mr. Carter, the Chairman of the North-Western Economic Planning
    1554
    Council, that to flood the valley would be unthinkable.
    The Lake District has a very special and a very brittle beauty. The amenities of it are not expendable, in any circumstances. Above all, there should be no panic measures in the future, because of the crisis which is approaching Manchester, to attempt to use the lakes for an emergency situation.
    7.55 a.m.
    The Minister of Housing and Local Government (Mr. Richard Crossman): I am grateful to my hon. Friend the Member for Manchester, Wythenshawe (Mr. Alfred Morris) for raising this issue, and I hope that he will realise that the importance which I attach to it is indicated by the time in the morning when I have decided to reply to him.
    My hon. Friend is quite right in saying that the belief that we can wait until 1980 for a further source of supply for Manchester is unrealistic. I would say to the hon. Member for Westmorland (Mr. Jopling) that those who waited would find themselves under pressure to undermine the safeguarding of the lakes which I have been trying to write into the new Order. There is no delay about the new Order. It is with the printers, and it will be made as soon as it comes back, either at the end of this week, or next week, so there will be an opportunity to see it and discuss it.
    It is true that on Manchester's calculations some further supplies will be necessary by 1973–74–75, and I am urgently concerned, with the Water Resources Board, in trying to find these further supplies in good time. It is also true that the severe cutting back of Manchester's supply from Ullswater, implicit in the new Order, makes this search for supplies even more important.
    There are one or two things which I should like to say about sources of supply. I think that we can rule out the More-cambe Bay barrage or the Solway as producing water before 1980. It may be good for the second range of supply, but for the first instance it would not be good enough. We can also rule out desalination for the period of the 'seventies, and for this period, therefore, we have to look elsewhere.
    As my hon. Friend knows, I am making sure that the Water Resources

    1555
    Board, which I have invited to do this, shall before the end of this year draw up a list of conventional water schemes for urgent investigation. The Board has promised that this will be done, and we will start this work before the end of this year.
    The Board has a Northern Committee which is assessing long-term demands and resources for the whole of the North of England. It includes the technical officers of all the river authorities concerned and of the principal water undertakers—including, of course, Manchester. Its study will cover the period up to the end of the century, and will take account of river regulation works, direct abstraction from inland water and underground plus barrages and desalination.
    But, as I have said, the Committee's immediate task, which it is accelerating at my request, will be to prepare a short list of schemes for Manchester and South-East Lancashire on which urgent detailed investigation must be concentrated. When this report is ready, my officers and I will meet the Board and discuss the proposals. Manchester will, of course, be fully associated with the discussion.
    Manchester has asked whether it should be setting its own consultants to work on new projects for the long term. I believe that the Board wants me to discourage that, because it is the job of
    1556
    the Water Resources Board and the river authorities to do the exploratory work which, in the past, was left to the individual water undertaker, or was neglected. This exploratory work is now being done by the Northern Committee.
    When the preliminaries have been completed and a short list of possible projects drawn up, I want Manchester and its consultants to undertake detailed further investigation of some of these projects which look likely, others being left to the river authority concerned. Manchester need be in no doubt that its co-operation will be used to the full, but this time it will be under the general direction of the Board and of my Ministry.
    There will be nothing more from Ullswater. There will be no more artificial reservoirs like Winster Valley. There will not be any more of that sort of thing, but we must look forward to the long-term. We have to look at the lower reaches of the rivers in this region. This is the area on which we are concentrating our attention, and I can tell both hon. Members that on this occasion the exploration is taking place early enough to provide the necessary interim solution in the mid-seventies, before the major solution of the 'eighties.
    Question put and agreed to.
    Adjourned accordingly at one minute to Eight o'clock a.m.

PENSIONS AND NATIONAL INSURANCE
  Insure Persons (Personal Information)
  Insure Persons (Personal Information)
  National Assistance (Rate Rebate Applications)
  National Assistance (Rate Rebate Applications)
  Unemployment Insurance (Self-Employed Persons)
  Unemployment Insurance (Self-Employed Persons)
  Death Grant
  Death Grant
  Retirement Pensions (Cost of Living)
  Retirement Pensions (Cost of Living)
  Maintenance Orders (Arrears)
  Maintenance Orders (Arrears)
  Low-Income Families (Survey)
  Low-Income Families (Survey)
  National Assistance Recipients, Norfolk (Wage Stop)
  National Assistance Recipients, Norfolk (Wage Stop)
  National Assistance (Deserted Wives)
  National Assistance (Deserted Wives)
  Widows' Benefits
  Widows' Benefits
  Industrial Death Benefit
  Industrial Death Benefit
HOSPITALS
  New Geriatric Unit, St. Austell
  New Geriatric Unit, St. Austell
  Geriatric Beds (Leeds Area)
  Geriatric Beds (Leeds Area)
  Kettering General Hospital (Ophthalmic Out-Patients)
  Kettering General Hospital (Ophthalmic Out-Patients)
  Cercival Cancer Screening Facilities (Wellingborough Area)
  Cercival Cancer Screening Facilities (Wellingborough Area)
  Waiting List (Wellington and Salop Areas)
  Waiting List (Wellington and Salop Areas)
MINISTRY OF HEALTH
  Dental Treatment
  Dental Treatment
  Pharmacists (Payments)
  Pharmacists (Payments)
  Cigarette Sales (Television Advertising Ban)
  Cigarette Sales (Television Advertising Ban)
  General Practitioners (Executive Council Fines)
  General Practitioners (Executive Council Fines)
  Eye Ointment (Metal Containers)
  Eye Ointment (Metal Containers)
MINISTRY OF LABOUR
  Skilled Workers (Overseas Resources)
  Skilled Workers (Overseas Resources)
  Industrial Training Boards
  Industrial Training Boards
  Turner Paper Mill, Rawcliffe (Redundant Workers)
  Turner Paper Mill, Rawcliffe (Redundant Workers)
  Unemployment (Western Isles)
  Unemployment (Western Isles)
  Road Haulage Industry (Charges)
  Road Haulage Industry (Charges)
  Ship Repairing Industry (Redundancy Payments Act)
  Ship Repairing Industry (Redundancy Payments Act)
GIBRALTAR
  Anglo-Spanish Talks
  Anglo-Spanish Talks
  TSARIST BONDS
  TSARIST BONDS
  ANGLO-ARGENTINE TRAMWAYS
  ANGLO-ARGENTINE TRAMWAYS
  GERMAN DEMOCRATIC REPUBLIC (UNITED NATIONS ORGANISATION)
  GERMAN DEMOCRATIC REPUBLIC (UNITED NATIONS ORGANISATION)
  INDONESIA (AID)
  INDONESIA (AID)
  ASSEMBLY OF WESTERN EUROPEAN UNION (RECOMMENDATION 132)
  ASSEMBLY OF WESTERN EUROPEAN UNION (RECOMMENDATION 132)
  VIETNAM (MILITARY EQUIPMENT)
  VIETNAM (MILITARY EQUIPMENT)
  RHODESIA (SALES TO JAPAN, PORTUGAL AND SWITZERLAND)
  RHODESIA (SALES TO JAPAN, PORTUGAL AND SWITZERLAND)
NATIONAL FINANCE
  Government Advertising
  Government Advertising
  Civil Service Commission (Examination Standards)
  Civil Service Commission (Examination Standards)
MINISTRY OF AVIATION
  Spadeadam Establishment (Technicians)
  Spadeadam Establishment (Technicians)
  Departmental Staff
  Departmental Staff
HOUSING
  Rent Assessment Committees (Determinations)
  Rent Assessment Committees (Determinations)
LOCAL GOVERNMENT
  Reservoirs (Recreational Purposes)
  Reservoirs (Recreational Purposes)
  Planning Permission (Compensation for Revocation)
  Planning Permission (Compensation for Revocation)
HOME DEPARTMENT
  Unlicensed Motor Vehicles
  Unlicensed Motor Vehicles
  Maintenance Orders
  Maintenance Orders
  Fireworks (Accidents to Children)
  Fireworks (Accidents to Children)
  Traffic Wardens
  Traffic Wardens
SIERRA LEONE
  Outstanding Accounts
  Outstanding Accounts
SEAMEN'S STRIKE
  SEAMEN'S STRIKE
  SEAMEN'S STRIKE
MINISTRY OF DEFENCE
  Services Liaison Officers (School Visits)
  Services Liaison Officers (School Visits)
  Married Quarters, Germany (Minimum Age Regulation)
  Married Quarters, Germany (Minimum Age Regulation)
  Aircraft C
  Aircraft C
  Offshore Forts
  Offshore Forts
  R.A.F. Transport Command Aircraft (Export Requirements)
  R.A.F. Transport Command Aircraft (Export Requirements)
  Conventional Weapon Purchases (Conditions of Use)
  Conventional Weapon Purchases (Conditions of Use)
EDUCATION AND SCIENCE
  Scientific and Technological Institutions (Charities)
  Scientific and Technological Institutions (Charities)
  Management Studies (Courses)
  Management Studies (Courses)
  Summer-Solstice Ceremony, Stonehenge (Safeguarding Cost)
  Summer-Solstice Ceremony, Stonehenge (Safeguarding Cost)
  DESERTED WIVES AND FATHERLESS FAMILIES (STUDY)
  DESERTED WIVES AND FATHERLESS FAMILIES (STUDY)
PUBLIC BUILDING AND WORKS
  Kensington Palace (Expenditure)
  Kensington Palace (Expenditure)
  DUCHY OF LANCASTER
  DUCHY OF LANCASTER
SCOTLAND
  Piers and Harbours, Islands
  Piers and Harbours, Islands
TECHNOLOGY
  Private Firms and Government Establishments (Minister's Visits)
  Private Firms and Government Establishments (Minister's Visits)
  Trade Unions (Ministerial Contacts)
  Trade Unions (Ministerial Contacts)
BOARD OF TRADE
  Export Services Branch (Interpreters)
  Export Services Branch (Interpreters)
  British National Export Council (Market Research Projects)
  British National Export Council (Market Research Projects)
TRANSPORT
  Parking Meters (Revenue)
  Parking Meters (Revenue)
  British Railways (Road Vehicles Fleet)
  British Railways (Road Vehicles Fleet)
  Cars for Cities (Report)
  Cars for Cities (Report)
  Driving Instructors (Registration)
  Driving Instructors (Registration)
RAILWAYS
  Closures (Marplan Survey)
  Closures (Marplan Survey)
  Workshops (Outside Contracts)
  Workshops (Outside Contracts)
PORTS
  Modernisation
  Modernisation

Preamble
The House met at half-past two of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Chichester

RHODESIA: THE EXPLORATORY TALKS
2.35 p.m.
LORD CARRINGTON: My Lords, I beg leave to ask the Question of which I have given previous Notice—namely:
To ask Her Majesty's Government whether they will make a statement on the adjournment of discussions with the Rhodesian officials?
LORD SHEPHERD: My Lords, my noble friend Lord Beswick will answer this Question by a Statement at about 3 to 3.30 this afternoon.

WESTMINSTER ABBEY ANNIVERSARY SERVICE
LORD SHEPHERD: My Lords, may I also make a brief reference to the proceedings of this House on Wednesday next? As the House will know, it is the intention to sit at 11 a.m. and then to adjourn in order to attend a service in Westminster Abbey. It would help very considerably if we knew the names of Peers who intend to attend that service. Therefore we should he very grateful if between now and to-morrow those Peers who wish to attend would give their names, either to their Whips or to the Table, so that we may have some idea of the seating to provide.

BUSINESS OF THE HOUSE
LORD SHEPHERD: My Lords, on behalf of my noble friend the Leader of the House, I beg to move the Motion that stands in his name on the Order Paper.
Moved, That Standing Order No. 35 (Arrangement of the Order Paper) be
454
dispensed with to-morrow for the purpose of giving the Second Reading of the Overseas Aid Bill precedence over the two Motions relating to the Emergency Powers Act 1920.—(Lord Shepherd.)
On Question, Motion agreed to.

MINISTRY OF SOCIAL SECURITY BILL
2.38 p.m.
Order of the Day for the Second Reading read.
LORD BOWLES: My Lords, I beg to move that this Bill be now read a second time. We are to-day considering a Bill which marks the completion of one more stage in the Government's review of our social services. When we took office in October, 1964, we took immediate action to make substantial improvements in the levels of existing benefits: National Insurance, war pensions and National Assistance. These increases brought our present system of social security benefits up to new high levels. Since then my right honourable friends the Minister without Portfolio and the Minister of Pensions and National Insurance have been considering very carefully whether, and how far, that system itself needs bringing up to date. It was, after all, a product of the war years and the difficult years that followed the war. The thinking behind it was rooted in the problems of the 1930s, problems associated with depression and mass unemployment. It would be surprising indeed if changes were not called for; and hardly to our credit as a Government or as a nation if we could not find the ideas and the resources to make them.
We are making them. The first big step forward in our modernisation of social security was the introduction of the earnings-related benefits for unemployment, sickness and widowhood. These benefits are designed for the better protection of those in working life faced with a sudden loss of earnings. They will start in the autumn. Here we take our next step: a Bill for the better protection of those who are among the poorest members of our community: the chronic sick and the handicapped and disabled, those who have never been able to work, fatherless families and, the biggest group of all, those of our old people who need

455
more than their retirement pensions or who have no pensions at all.
The mainspring behind this Bill is the need to do more for our old people. Your Lordships will remember that the Conservative Administration started a survey of the economic circumstances of old people. It was to their credit that they did so, although I believe it was the representations of my right honourable and honourable friends in another place which pushed them into action. The results of that survey, as your Lordships may know, were published a fortnight ago. It brought out only too clearly how poor are many of our old people and, equally important, how far our existing service for helping those in need is failing to protect them. I commend the Report of the survey as a major social document of our times—a portrait of old age in Britain in the 1960s. It is far from reassuring.
I will not bore your Lordships with a mass of figures. But consider these few facts: There are now 6½ million pensioners in this country. About 1¼ million of them are now getting National Assistance. The survey tells us that another 700.000 pensioner households—that is 850,000 pensioners all told—could have National Assistance if they applied for it. Over 100,000 of these appeared to have no resources to live on other than the retirement pension. No Government could be content with that situation. This Government are certainly not content. My right honourable friends have grappled with the problem over many months and have embodied their ideas in the Bill before us, and in the White Paper presented when the Bill was introduced in another place. I mention the White Paper especially because some of the most important developments are in administration and, therefore, are not in the Bill at all. I will come back to these later.
The Bill itself has two main purposes. First, in Part I, it creates a new departmental framework for the administration of social security cash benefits, with one Ministry of Social Security taking the place of the Ministry of Pensions and National Insurance and the National Assistance Board. Secondly, in Part II, it creates a new non-contributory benefit
456
to supplement the existing contributory benefits of the National Insurance and Industrial Injuries schemes, and it gives the benefits as of right. Parts III and IV of the Bill are subordinate to these main features. Part III is concerned with the recovery of the cost of the new benefit awarded to wives and families where a husband or father has a duty to maintain them and has failed to do so. It also provides for recovery where over-payments have occurred because of misrepresentation or non-disclosure of material facts.
Part IV is concerned, first, with two important components of the new administration: advisory committees for the new Ministry, and appeal tribunals for the new benefit. Secondly, it prescribes offences, and penalties, in connection with the new benefit itself and with the new Ministry: for example, for fraud and for the personation of officers. Thirdly, it re-enacts the existing law providing for re-establishment and reception centres. Finally, it deals with the necessary mechanics of legislation in this field, including provisions for Northern Ireland, consequential amendments to other enactments and transitional provisions.
It will, I think, be most helpful to your Lordships if I concentrate on the provisions of Parts I and II of the Bill, dealing with the new administrative structure and the new benefit, and on the Schedule which sets out in some detail the rules governing the new benefit. Your Lordships will be aware that when the Bill was debated on Second Reading in another place, special circumstances made it necessary for my right honourable friend to curtail much of what she intended to say in explanation of the Bill. It may be helpful, therefore, if I bring out some of the points which had to be omitted on that occasion. I do not, of course, want to trespass on your Lordships' time, but this is an important Bill and it is only right that Parliament should give it full consideration.
First then, Part I of the Bill. It sets up the new Ministry of Social Security and abolishes the Ministry of Pensions and the National Assistance Board. It sets up within the new Ministry a Commission which will be responsible for determining the claims made for the new benefits and carrying out certain other

457
functions under this Bill and under other legislation in place of the National Assistance Board.
Now it is easy to be misled—and I think some of your Lordships have perhaps been misled—into thinking that this just amounts to a bit of name-changing. For instance, the noble Lord, Lord Drumalbyn, said, when these changes were announced in March:
"This is, in essence—let us recognise it—a revamping of National Assistance. The Board is being abolished and a Commission is being substituted."—[OFFICIAL REPORT, Vol. 273 (No. 47), col. 927; 7/3/66.]
But there is a great deal more to it than that. It is a fact that when this Bill comes fully into operation there will no longer be two separate Government Departments as there are now—the Ministry of Pensions and National Insurance and the National Assistance Board. There will be one Department and, in the fullness of time, one network of local offices. As the White Paper put it:
"In the future there will no longer be the sharp distinction which now exists in the administration of contributory and means-tested benefit".
The Commission will not have anything like the separate, totally independent role of the present National Assistance Board. But neither will it be just "an advisory body"—the noble Lord Lord Ilford, used those words on 7th March [col. 928]. I think he will since have seen from his reading of the Bill that while the Commission will undoubtedly have an advisory role, it will have a positive real job to do. I doubt whether it has yet been fully appreciated how novel this structure is. There will he only one Ministry, with one Minister responsible for all the social security cash benefits, including the non-contributory benefit. The main rules governing the award of that benefit are set out in the Bill itself, and the Minister will be directly responsible for all the Regulations concerning their administration. But the handling of individual claims and the general guidance of the new scheme will be under the direction of the Commission, who will be a group of independent people, detached from the Government of the day and experienced in social affairs. In this way, we hope to gain for the new benefit the best of both worlds: it will be awarded as of right
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under clear qualifications, and paid by the same Minister who is responsible for the National Insurance benefits—indeed, for old people it will be paid on the same order-books eventually. But it will retain the humanity and flexibility in administration which have been universally admired features of the administration of the National Assistance Board.
In this connection, I wish to draw attention to the words used in Clause 3(1) about the Commission, which, like the National Assistance Board at present, will have the duty of promoting the welfare of the people with whom it deals. Those of us who are familiar with the needs and problems of old people particularly those living alone, will know how important it is that under our social services we should not only provide the financial and welfare services that are required but also ensure that the old people make the best use of them. This matter of "welfare detection" is of vital importance. It is already being done effectively among nearly 1½ million old people by the officers of the National Assistance Board and there is every intention, not only that that work should continue, but that it should cover even greater numbers under the new arrangements.
Before I turn from Part I of the Bill, let me make two general points about the idea of combining two substantial Departments—the Ministry of Pensions and National Insurance and the National Assistance Board—into one Ministry. There are, as noble Lords opposite will no doubt be pointing out during the course of our debate, differences of opinion about how far the process of amalgamation of the social service Departments should go. I believe that noble Lords opposite would wish to go further than this Bill does and bring the Ministry of Health into the one Ministry as well. The Government take a different view. They see a real case—a practical, hard-headed case—for bringing together the Departments concerned mainly with social security cash benefits. The two Departments concerned each have a clientele largely overlapping the other's; each is concerned with making each week hundreds of thousands of cash payments, mainly through the Post Office; each has a local office network dealing with people and their claims to

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financial benefits of one kind or another. In short, there is much common ground between the two Departments.
This does not apply in anything like the some degree to the Ministry of Health, whose main preoccupation must naturally be the National Health Service. We think the two administrations of social security cash benefits, on the one hand, and the National Health Service and the health welfare services, on the other hand, are best kept separate. But this is not to say, of course, that there must not be the closest possible liaison at all levels between the Department providing mainly money and the Department providing, through doctors, hospitals and the local authorities, mainly services of various kinds. There already exist good working relationships in the field between the local officers of the Board and the health and welfare services, and it is our intention not only to maintain but to improve them. We do not have to legislate for this.
My second point concerns the staff of the two existing Departments. When they are brought together in one Department we shall have a new Ministry employing over 56,000 people. The staffs of the two existing Departments have earned high reputations both for efficiency and for that courtesy and consideration which make all the difference to the people we are concerned with. Care must and will be taken to ensure that in the new Ministry the high standards of the two former Departments are maintained and, where possible, made better still. There will be the challenge not only of a new Ministry and of the new developments in local administration to which I have referred but also of establishing a new scheme of benefits in place of National Assistance.
I turn now to the benefits themselves, dealt with in Part II of the Bill. The Bill provides two principal benefits—supplementary pensions for those of pensionable age and supplementary allowances for other people. This is an important distinction which is reflected at other points in the Bill.
The basic principle which is set out in Clause 4 is broadly that a person is entitled to benefit if he satisfies the qualification that his resources are less
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than his requirements as determined under the provisions of the Bill. What this means in simple language is that if the claimant's income does not come up to the standards laid down in Schedule 2 he gets a supplementary pension or supplementary allowance to close the gap. This requires, of course, as noble Lords will appreciate, that the claimant must give full details of his commitments, for example, his dependants and his rent and of his resources, whether of income or capital. This is a means-related benefit. Noble Lords will be only too familiar with the way in which a means test became an unacceptable idea in years past. But times have changed and there is a growing awareness of the fact that without a benefit of this kind we cannot make proper provision for many of our old people. It is of interest to note in this connection that the Survey of Retirement Pensioners, to which I have already referred, showed that a really big factor that has kept so many old people from applying for National Assistance is not dislike of the Board but ignorance or misunderstanding, and it is in order to deal with ignorance and misunderstanding that the rules for the assessment of benefit have been completely recast.
Your Lordships will not, I think, want me to go into the details of Schedule 2, but I should like to make some general comments on it. The rates of income requirements are set out in Part II of that Schedule. These give the basic standard to which the claimant's income is brought. Leaving aside the rates for children and persons under 21, there are three main rates: for a married couple £6 13s., for a single householder £4 1s., and for other single persons £3 9s. per week. These are the basic rates for supplementary allowance claimants—that is, for people under pension age.
For people over pension age, and for those who have been two years in receipt of a supplementary allowance other than the unemployed, the figures I have mentioned are increased by what we call a long-term addition of 9s. a week. So, for a supplementary pensioner the income standard is to be: for a married couple £7 2s. a week; for a single householder £4 10s. a week; for other single people £3 18s. a week. Rent is added to these amounts. For the married couple and the single householder the amount added

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will normally be the full net rent or, if the accommodation is shared with other adults, the proportionate share of it. For the non-householder, that is the person who is living as a member of someone else's household and is not, therefore, directly responsible for rent himself, the addition for rent will be a standard figure of 10s. A few examples may be of interest here. First, a retirement pensioner living alone and paying a rent of £1 10s. a week. His income standard will be £6 a week. Secondly, a married couple, where the husband has been sick for more than two years, or where he is over pension age, and the rent is £1 15s. per week. Their income standard will be £8 17s. a week; and thirdly, a separated wife with three children aged 3, 7 and 12, and paying a rent of £2 per week. Her income standard will be £10 7s. 6d. a week.
The main innovation in these income standards is the long-term addition of 9s. a week, and it may be helpful if I say a little more about it. I have already referred to the fact that one of the obstacles to acceptance of National Assistance was ignorance or misunderstanding. One of the reasons for this misunderstanding is that special needs, particularly of old people are met by a system of discretionary additions. These additions involve detailed enquiries into all kinds of quite small expenses and these in themselves may give rise to misunderstanding and apprehension; but, more important, the old person cannot know in advance whether he will get such an addition and, therefore, cannot know what he is due to get by way of a payment. The long-term addition makes a substantial contribution here. It will enable us to dispense with the detailed enquiries in every case which have to be made under National Assistance, and it will enable the old people especially to know more clearly where they stand. This means that, as was said in the White Paper:
"…an old person living alone as a single householder will have a guaranteed income after he has paid his net rent and rates of £4 10s. a week. For a married couple the figure is £7 2s. after payment of net rent and rates".
My Lords, I can anticipate a question in your minds here, as to how the figure of 9s. was arrived at. The answer is that it is about the average of the discretionary additions now paid over the year
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as a whole under the National Assistance scheme.
I want also to bring to your Lordships' notice that where there are special needs of more than 9s., the Commission will have no less power than the Board has to make further provision. And the Commission will have the same powers under Clauses 7, 13, 14 and 17 of the Bill as the Board has now to deal, under discretionary powers, with any exceptional situation; for example, where a lump-sum grant is needed for, say, bedding, or where benefit is better paid in kind or to a third party. There is, however, an important difference about the supplementary pension. The Commission may increase it to meet exceptional circumstances, but they may not reduce it. Taken together with what I was just saying about the effect of the long-term addition, this makes it a reality that for old people this Bill provides a form of guaranteed income to which they have a clear entitlement.
Take two of the cases I have just mentioned. There was the retirement pensioner, living alone and paying a rent of £1 10s. a week, whose income standard is £6 a week. If his retirement pension is £4 a week, and he has no other resources, he will have a clear entitlement under this Bill to a supplementary pension of £2 a week to give him his guaranteed income of £6. Similarly, in the case of the married couple I mentioned, paying a rent of £1 15s. a week, whose income standard is £8 17s. a week, if they have only their retirement pensions of £6 10s. a week and no other resources, they are entitled—I repeat, entitled—to a supplementary pension of £2 7s. a week, to give them their guaranteed income of £8 17s. Of course, if in the cases I have just mentioned, the claimant has some other kind of income or capital, he will be better off.
This brings me to the rules in Part III of Schedule 2 for the treatment of resources.
LORD DRUMALBYN: My Lords, before the noble Lord leaves that question (and no doubt he would like a little rest at this time, anyway), he has been talking about the old people, but Schedule 2 says that a supplementary allowance may be reduced below the allowance so calculated, or may be withheld. Is this

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in relation only to the wage-stop, or does it apply more generally?
LORD BOWLES: As at present advised, I believe it applies to the wage stop only. But no doubt my noble friend Lord Sorensen, when he comes to reply, will be able to clear up that point for the noble Lord.
As I was saying, this brings me to the rules in Part III of Schedule 2 for the treatment of resources. The aim here has again been the dual one of clarifying entitlement, so that people can know where they stand, and of replacing the existing complex provisions by more standardised rules. Noble Lords may think that Part III of Schedule 2 is hardly a child's guide. It looks rather full of detail. This is necessary if we are to have clarity. But the broad effect of these rules can be quite simply summarised. First, the rules for capital. An owner-occupied dwelling is ignored. So is the first £300 of other capital. Thereafter, capital is converted into income, under a tariff of Is. a week for £25 up to £800, and 2s. 6d. a week per £25 thereafter. So £800 capital is treated as an income of £1 per week.
LORD HAWKE: My Lords, before the noble Lord leaves that point, may I ask what is the basis of that particular calculation? I find it puzzling, because it assumes that the pensioner is getting 10 per cent., tax-free, on his money on sums between £300 and £800, and no less than 25 per cent. if he has over £800.
LORD BOWLES: My Lords, the £800 is capital, not income, so £800 capital is treated as being income of £1 per week.
LORD HAWKE: Supposing that his £800 capital was completely idle and was earning nothing at all, he would have quite a large sum deducted from his entitlement in consequence, because it is assumed that sums between £300 and £800 are earning 25 per cent.
LORD BOWLES: I do not think the noble Lord has that right, but I will look into it; and if I am wrong, I will let him know.
Now, the rules for income. The main National Insurance benefits, family allowances and maintenance payments are taken fully into account. Everything else
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is eligible for a disregard up to a limit. Earnings are disregarded up to £2 a week for each person, except where the claimant has to register for work: the disregard for him is 20s. Disability pensions of all kinds are disregarded up to 40s. a week. So are part of the children's allowances payable to widows and part of war widows' and Industrial Injuries widows' pensions. All other income, including tariff income from capital, is disregarded up to 20s. a week, subject to an overall limit of £2 on disregards of all kinds apart from earnings.
I should like to bring particularly to your Lordships' attention the facts that there are now no fixed limits to the amount of capital a person may have and qualify for benefit, and that by the device of converting capital over £300 into income, for this purpose, under the capital tariff, we will now allow a bigger disregard of capital altogether for people with no other resources. This is because the tariff income qualifies for the disregard of up to 20s. A person with no other income subject to disregard can have up to £800 wholly ignored. It will, I hope, be clear to your Lordships that the income standards I previously referred to are more accurately described as minimum income standards, for under these rules many people will have an income of up to £ 1 or £2 a week more, and may have substantial savings as well.
If I may return for a moment to the basic principle of assessment, which is to deduct resources from the income standards and pay the balance, if any, I draw attention to the rules in paragraph 2 of Schedule 2 which govern the amount actually payable after that calculation has been made. The first rule says that if the deficiency is less than 2s., benefit will not be paid, and the second rounds the sum payable to the nearest Is. The reasoning behind these rules, which are not new, is, I think, plain enough: it is better for all concerned not to be involved in trifling sums. There is, however, a technical point arising on this paragraph in relation to cases where noncontributory benefit is paid on the same instrument as a National Insurance benefit. The Parliamentary Secretary referred to this during proceedings in another place, and said that we might need to consider some Amendment during your Lordships' consideration of

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the Bill. I think I should tell your Lordships that an Amendment will in fact be needed, and that we shall put it down as soon as possible.
Before leaving Part II of the Bill I ought to say to your Lordships that the provisions of Clauses 8, 9 and 10, dealing with exclusions and disqualifications, follow existing practice. I have not, therefore, thought it necessary to dwell on these, because they involve no new policy. As to the other clauses to which I have not yet referred, two of them are particularly of interest.
Clause 18 provides a right of appeal to a local tribunal against any decision of the Commission on a claim for benefit or on related questions concerning a claim—for example, whether the claimant should be required to register for work as a condition of receiving benefit. A right of appeal is important, the more so in a scheme of this kind which gives benefits as of right but also gives the authority determining the claim—that is the Commission—certain powers which it exercises at its discretion. The tribunal will have the same powers in dealing with an appeal as the Commission will have in dealing with an ordinary claim.
Clause 21 brings a chapter of social history to an end by terminating the last remnant of the old non-contributory old-age pension scheme, which dates from the very first measure of social security for old age put on to the Statute Book, the Old Age Pensions Act 1909. In referring to this I must draw your Lordships' attention to the fact that there are specific provisions in the Bill (paragraphs 4 and 7 of Schedule 7) which enable us to ensure that no one, either as a consequence of this clause or of the repeal of some other old features of the National Assistance Act, like the war savings provision, is any worse off than at present.
Now a brief word about Pants III and IV of the Bill. As to Part III, its five clauses are in most respects similar to those of the National Assistance Act. They are concerned first with the recovery of payments of benefit from husbands who have deserted their wives, and from the fathers of illegitimate children; and, secondly, with the recovery of over-payments which arise as the result of a claimant failing to give a true and accurate account of his cir-
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cumstances. One regrets, of course, that such provisions are necessary, but it would be foolish to suppose that there will not be attempts to obtain money under the new scheme on the strength of false statements, or that certain husbands and fathers will not attempt to avoid meeting their responsibilities. The sums of money at issue in this latter group are substantial and may be of interest to your Lordships. In 1965 the National Assistance Board were paying at the rate of over £40 million a year to separated wives, mothers of illegitimate children and divorced women. The yearly value of payments received from the liable husbands and fathers was less than a quarter of this sum.
Part IV of the Bill contains mainly provisions which are naturally consequential to the provisions of Part I abolishing the Ministry of Pensions and National Insurance and the Board as separate Departments. I wish to comment briefly on three of these. Clause 27 provides for local advisory committees for the new Ministry. These new Ministry of Social Security committees will replace the existing separate local National Insurance and National Assistance advisory committees. There will thus be a unified network of local committees whose concern will be with the administration of both National Insurance and non-contributory benefits. I ought perhaps to emphasise the word "local" in this clause because, of course, the Minister will have quite separate central bodies to turn to for advice on matters of policy. In the field covered by this Bill there will be the Commission itself; and there are in the field of National Insurance the existing National Insurance Advisory Committee and the Industrial Injuries Advisory Council which, of course, continue. The separate War Pensions Committees are unaffected by the Bill.
Secondly, there are innovations in Clauses 31 and 32. When the Bill becomes law it will become an offence to personate an officer of the Ministry with intent to deceive (Clause 31), or for a person to take any order-book issued by the Ministry into his possession as a pledge for a debt (Clause 32). These provisions are needed to deal with two very real problems at the moment: inquiry agents who pose as officers of the

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Ministry of Pensions and National Insurance in order to get information, for instance, from a man's employers; and unscrupulous salesmen who persuade women to pledge an order-book (for instance a family allowances order-book) as security for instalments of payments due on goods or for loans at a high rate of interest.
Finally, Clause 34 provides that the Commission shall take over from the Board the administration of re-establishment and reception centres, though they will be running them on behalf of the Minister of Social Security, and under his general directions. The clause otherwise simply re-enacts the provisions of the 1948 Act. But this is not to say that there will be no progress on the matter of dealing with the problem of the homeless. As your Lordships will know, a national survey has been undertaken to find out the size of the problem and its nature as a preliminary to the Government's considering whether further action is needed, and, if so, what form it should take.
I undertook, earlier on, to say something about the administrative changes which will be complementary to the Bill and which, I think your Lordships will agree, will make a valuable contribution to the solution of the problem the Bill sets out to deal with. These changes were referred to in paragraphs 23–25 of the White Paper. There are four particularly important ones. First, the procedure for claiming will be more flexible than under the present system, since an old person will, if he wishes, have the opportunity of making a written declaration of his circumstances instead of being visited at home. Frankly, taking the scheme to old people in their own homes will, I am sure, seem to most of us the sensible and most considerate way of administering it, and most old people seem to welcome the officers' visits. But the fact is that there are people who prefer it otherwise, and no one wishes to make a home visit an obstacle to a pensioner getting the non-contributory benefit he is entitled to. That is the reason for this innovation. In the nature of the case, there will have to be a confirmatory interview, but this can take place in the office if need be. This arrangement comes into force immediately the new scheme of benefits is introduced.
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Secondly, there is the proposal to pay supplementary pensions on the same book as retirement pensions. So that whether a person has only a retirement pension, or a retirement pension and a supplementary pension, he will in due course be paid on the same kind of book, and there will be only one book. The attractions of this are, I am sure, obvious. The administrative difficulties of doing it are, I imagine, not so obvious to your Lordships, but they are very real and it is for this reason that the scheme of single books will start—as soon as possible—on a pilot basis.
Thirdly, the supplementary pension will be administered on the basis of annual renewals; that is, once a year the local officer will be asking the pensioner for a renewal declaration of his circumstances, on the basis of which his pension will be continued or adjusted to meet any changed circumstances as appropriate. This will be a welcome simplification and will put old people in the position of knowing that for a year ahead they have, unless their circumstances change materially, their guaranteed income.
Finally, there will be new arrangements introduced as soon as possible to follow up those who have just retired or have become widowed in retirement by reminding them of the supplementary pension scheme and inviting them to make a claim. If they fail either to claim or to say that they do not wish to, the Ministry will arrange for a personal contact. This kind of personal interest may perhaps be among the most effective ways of ensuring that in the future those who have a title to supplementary pension will claim it.
My Lords, this is a Bill which will, I think, command general support. It is humanitarian in its aims and will confer additional benefits on a large number of people. Given the approval of Parliament in time it will come into operation before the end of the year. In my submission the introduction of this Bill is evidence again of the determination of Her Majesty's Government, with the willing support of the people, to ensure that we do the very best we can for the fatherless families, the handicapped and disabled, the sick and the old. These are the people—some three million of

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them—whom this Bill will help. I beg to move.
Moved, That the Bill be now read 2a.—(Lord Bowles.)
3.15 p.m.
LORD DRUMALBYN: My Lords, the noble Lord is quite right, I am sure, in thinking that what he has said to-day and this Bill will commend itself in general terms to your Lordships. I should like to thank him straight away for his very full explanation of the Bill. As he said, he has been able to fill in some of the gaps which it was not possible for the Minister in another place to speak about, owing to shortage of time and the circumstances there. Before I come to my comments on the Bill, I should also like to welcome to our debate to-day the noble Lord, Lord Taylor of Mansfield. He and I have exchanged ideas from different sides of the House many times in another place, and I have always appreciated his courtesy and humanity. I would also welcome to our own Front Bench my noble friend Lord Windlesham, who is to wind up the debate for this side tonight.
As I understand it, there are five main practical purposes to be achieved by this Bill to which the noble Lord has referred. The first is to raise the basic assistance scales for requirements. The second is to raise the amounts and types of income to be disregarded in calculating the amount needed to bring income up to the requirements level. The third is to revise the way in which capital resources are treated in assessing need. The fourth is to modify some of the procedures which are thought to deter people from applying; and the fifth is to take steps to encourage and help those who are eligible for assistance, but do not apply for it, to do so. These are the main practical purposes of the Bill, and with all those proposals we agree; indeed, if I may say so, we commend them.
I do not propose to examine these changes in detail at any rate, at this stage. What I should like to do is to try to focus attention on what seem to be the main underlying issues and then to ask the noble Lord several questions (though some of the questions I was proposing to ask he has already answered) about the way in which the proposed arrangements are intended to work. First,
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I would refer to two general problems. For many years now National Assistance has not been expected, if it ever was, to provide by itself enough to live on. It is recognised that National Assistance benefits must invariably be supplemented by payments to cover rent and rates if an acceptable level of income is to be provided for those with little or no other resources than National Insurance benefits or pension. I venture to give one or two figures. At the end of 1964, some 23·3 per cent. of all retirement pensioners, including widows over 60, were receiving National Assistance allowances of one kind or another, 13·4 per cent. of those on sickness benefits, 15·3 per cent. on unemployment benefit, and 14·6 per cent. of widows under 60.
The first problem is how to ensure that everyone is aware that if he has little or no resources, apart from his National Insurance benefit or pension, he is entitled to a supplement to cover rent and rates, in addition to income from the National Insurance Fund. The results of the inquiry into the circumstances of retirement pensioners, to which the noble Lord referred, have just been published, and they reveal that, of National Insurance pensioners as a whole, a large majority have some income, in addition to their National Insurance pension: as one would have expected from the previous figures, eight out of nine married couples; three out of four single men, but only two out of three single women. The older the person is, however, the less likely he is to have any outside income. Of single women, only two out of five of those between 75 and 80 have any; and of those over 85 only one in two. It follows that there is a case for an addition to the requirements of the very old, say those over 75; that is, an extra payment over and above 9s. that is proposed to cover the usual extra requirements of all retirement pensioners. This is something about which we can argue in Committee, and I leave the matter there for the present.
This is a question affecting those who do apply for assistance, but what of those who do not? As the noble Lord said, it is calculated there are about 850,000 pensioners, or 700,000 households, who would receive assistance if they applied. Of those, there were about 250,000 households, or 300,000 pensioners, where either

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there were no resources other than retirement pension or there was a gap of 5s. or more between resources and requirements only partly bridged by amenities or facilities in the households in which they were staying. The number with no resources at all was, perhaps, 85,000 households. I think the noble Lord said 100,000 pensioners, but we need not argue about that. At all events, it is as well to get the programme in focus.
There is no inherent difficulty in notifying people, as they become entitled to retirement pension, of their right to supplementary payments if they need them. Indeed, this has been done for some time. I am glad that the Government intend to go further and ensure that at that point every individual new pensioner is contacted personally—unless, presumably, they say that they do not want to be. But there is greater difficulty in discovering those already receiving pensions who are entitled to supplements but have never applied for them, whether because they prefer to manage on what they have, or because of pride, or because, as the noble Lord said, they simply do not understand that they are entitled to supplements. Proportionately, there are far more of such people in the oldest age groups. Incidentally, as the noble Lord also said, only a small proportion have said that they dislike going to the National Assistance Board. I hope that as soon as the new provisions are brought into effect the new Ministry will start by sending to every retirement pensioner not at present receiving supplements a letter explaining, simply and clearly, what they may be entitled to, and what steps to take if they think they are. But here again, writing is probably not enough, and individual visits will be needed.
The second point I want to make is this. There is a still greater difficulty in discovering those in need who are not receiving either National Insurance pension or National Assistance benefit, but who would be entitled to it if they applied. These are the people that my noble friend Lord Colville of Culross was concerned about and sought to help in the Bill which he introduced a year ago. That is the second great problem, as I see it—and the more difficult and more urgent, in the sense that these people are all getting on in years; they are all over
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70. I cannot find any new proposals in this Bill or in the White Paper to identify these people. If I understood the noble Lord, Lord Bowles, correctly, he said that the work of seeking out would be intensified. But I doubt whether many will be induced, merely by changes in what the allowances are called, to identify themselves and to apply for them, unless and until they are forced by severe hardship to do so.
I recognise that the Government are anxious to reduce the resistance and misunderstanding which have deterred some old people—and, indeed, some younger ones—from applying for supplementary payments. It is the Government's intention that supplementary payments should be made in exactly the same way and through the same payments book as the National Insurance benefits. That is the intention. But first, as the noble Lord has said, and as mentioned in paragraph 24 of the White Paper, there is to be a test through a pilot scheme. Secondly, with the object of removing any taint or slur attaching to the acceptance of National Assistance, supplementary payments are to be described as "benefit", and the National Assistance Board is to disappear, its functions being absorbed into the Ministry of Social Security.
I want to make it clear that in seeking to remove reluctance on the part of those in need to apply for supplements the Government have, and will continue to have, our fullest support. At the same time, while accepting that these steps will have some beneficial effect, I suggest that we ought not to overrate it, and that we should consider any limitations and disadvantages in the steps proposed. In my view, the real resistance to accepting National Assistance has not arisen from the name "National Assistance", or from confusion with Public Assistance, or from dislike of the National Assistance Board, or from the fact that supplementary allowances are payable on a book separate from a National Insurance book, though latterly quite similar in appearance to it. In my view, the resistance is due mainly to the necessity to prove need and to the test of means applied in assessing it.
The Labour Party in Opposition made much political play with the test of means. They tried to get round it in their scheme in New Frontiers for Social Security, which envisaged an "income guarantee",

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the object of which, to quote from pages 18 and 19 of that document, was
"to remove, within a short period, all pensioners from National Assistance except those with very high rents or other special needs."
It continues:
"In the first year, the Guarantee will be fixed at a figure well in excess of the present level of retirement pension. It will then be increased by annual increments, so that at the end of the transition period it will be high enough to remove the great majority of pensioners from National Assistance."
There is nothing in the Bill about that last sentence.
Broadly, what the Bill does is to raise income requirements to approximately the same level as National Insurance, just slightly more, and then to add 9s. to those requirements, for any person over retirement age or anyone who has been out of work for two years and whose needs fall below the National Insurance level. As the noble Lord has said, such people will receive a minimum of £4 10s. if single and £7 2s. if married. The Bill also enables the Minister to increase the requirements in Part II of Schedule 2 by regulations, subject to approval by each House—a point which I do not think the noble Lord mentioned.
I must ask the noble Lord who is to reply to this question: Is it the intention of the Government to use this power to increase the minimum in the Bill by annual increments, not merely to keep pace with the cost of living, but to raise the level in real terms to the point where the great majority of pensioners will no longer need allowances? Whatever may be the Government's intentions for the future, it seems they have come to realise that there is no way of dispensing with a means test if we are to meet real need without spending public money where there is no real need. I am not saying that in no case should public money be disbursed without proof of need. Family allowances are an example. And my noble friend Lord Colville of Culross's Bill provided for payments to be made as of right, without test of means, to the very old, as being the only way of reaching those in need who are old, and as a measure of compensation for the losses which inflation has inflicted upon so many of them.
It would be churlish to suggest that in this Bill the Government have not tried to encourage those old folk who are
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receiving neither pension nor assistance to apply for supplementary payments, although, as I have said, there seem to be no new means in the Bill of seeking them out. I am sure we are all in favour of saving those in need trouble and embarrassment. For my part, I shall be glad if payments can be made in one book, so that those who see the payments being drawn in the post office will not know whether they are contributory or noncontributory. I also welcome the steps proposed to avoid, so far as possible, investigation into the old person's special needs, provided of course that they do not mean he may be deprived of payments he requires. What I am a little concerned about is the average which the noble Lord mentioned. I know that he mentioned this only as a reason for taking 9s. as the figure; but it is just possible that people, having got the 9s., may be a little more reluctant to apply should they need more than 9s. I mention that in passing.
What I am not so sure about is the wisdom of trying to blur the real distinction between contributory and noncontributory benefits. Anyway, in nine cases out of ten, the man behind the counter in the post office will know. The way in which the Bill seeks to blur the distinction is by using, for the first time, the word "benefit" to cover both contributory and non-contributory payments. So far the distinction has been maintained. For what it is worth, "benefit" is defined in the latest edition of the Oxford Concise English Dictionary as
"allowance, pension, attendance to which pension is entitled under National Insurance Act or as member of benefit society, etc."
In other words, "benefit" is something obtained in return for contributions made either by oneself or on one's behalf. Of course, words are constantly changing their meaning, and the Minister could no doubt reply, with Humpty Dumpty, "When I use a word, it means just what I choose it to mean." Unfortunately, as your Lordships will recall, a few minutes later Humpty Dumpty fell off the wall with a "heavy crash which shook the forest from end to end." There is really much more in this than the proper use of language.
LORD BOWLES: My Lords, I was going to say something about this, but if I had it would have made my speech

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somewhat longer than I intended. If the noble Lord, or any noble Lord, suggests another word, or name or title, we shall be happy to consider it.
LORD DRUMALBYN: I am grateful to the noble Lord, because I think there is more in this than simply the proper use of language. The blurring of the distinction between contributory and noncontributory payments could have a significant effect on the attitudes, efforts and morality of our people. I recognise that there is a real dilemma of policy here. On the one hand, an object of national policy should be to ensure that nobody is in need. The trouble is that need is relative. Even in so far as the concept of need can be generalised, it is constantly changing. On the other hand, an object of national policy should be to encourage everyone to make sufficient provision for himself, including contributory pensions. Here the important thing is to make it worth while for people to save, and to do everything possible to ensure that their savings retain their real value. The dilemma is that the more generously the State provides for people's needs through non-contributory payments, and the easier the State makes it to obtain such help, the greater is the temptation for people to rely on that provision rather than to provide sufficiently for themselves.
This is a dilemma and, as with all dilemmas, you have to jump through the horns somehow or other. For this reason I must express my doubts whether it is right that payments to meet need should be described by the same word as benefit provided in return for contribution; and I shall certainly respond to the noble Lord's invitation and do some hard thinking to see whether we can find a more appropriate word. If people are to get unearned allowances without any distinction at all from earned benefits, will they not come to believe that their contributions and benefits are in no way related; that they owe their benefits to the party and the State and not to the contributions that they and their employers have made?
The Bill abolishes the non-contributory Old Age Pensions Act; yet it seems to be taking a step backwards—it may have been inadvertent—to the beginning of the
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century. We may not be deluding ourselves about this, but we ought to ensure that others are not deluded. In my view, there is a distinction between what one has a right to by one's own efforts and by the contributions of oneself and one's employer, and what one has a right to because at some point in time Parliament says so—a distinction which is no less real if it is not explicit in the artificialities of law. It is for this reason that Iregard with very considerable misgiving the misuse of the word "benefit"—or, if you will, the extension of its meaning. I doubt very much whether it will have much effect in persuading non-pensioners who resent the means test to submit themselves to it. Moreover, this is essentially a transitional problem which ought to be dealt with by transitional provisions. I fear that it will have adverse long-term effects on the national outlook. Those that I can for-see seem to me undesirable. Nobody can foresee all the long-term effects, but I doubt whether many are compatible with the social security policy which the Government are pursuing.
This leads me to the merging of the Ministry of Pensions and National Insurance and the National Assistance Board.
LORD MITCHISON: My Lords, would the noble Lord allow me to put a short point to him? He talked about earned benefits and about money that was won by the man's or woman's own efforts. Is he not forgetting that National Insurance benefits derive not only from the man's contributions, but from those of the employer and those of the State?
LORD DRUMALBYN: My Lords, I did mention the contributions of the employer. As to the contributions of the State, it is a fact that the State contributions were really designed to make up for the fact that many people were going to get benefits they had not earned by their actual contributions on an actuarial basis, even though they were entitled to them.
I now turn to the merger. How far will this have any real impact on the public? The Minister in another place gave three reasons for this: first of all, the co-ordination of policy for all social security benefits; secondly, ensuring that

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those receiving contributory benefits would also get non-contributory benefits to which they are entitled; and, thirdly, the development of a new comprehensive service for the public so that inquiries across the whole range of social security benefits can be dealt with at one point of contact. There really is nothing in the first point. The Minister has always coordinated policy. It is the Minister who is responsible to Parliament for regulations under the National Assistance Act, and in general for the policy of the National Assistance Board. Where the National Assistance Board is independent is in the exercise of its discretionary functions; and the Commission which is to take over those functions is apparently to have the same degree of independence in exercising them, and rightly so.
The truth is that, in my experience, which is a short one, the physical separation of the Ministry and the National Assistance Board has involved certain obvious handicaps, at least for the Ministry. It is much more important, in my experience, that they should be together in the same building than that they should be merged. The question is not whether the Minister will co-ordinate policy—he has to do that in any case—but whether the Minister and the Chairman of the Commission and their respective civil servants will work together as a team. Marriage without cohabitation is apt to be incomplete and unproductive. I therefore ask the noble Lord whether the Commission will be housed under the same roof as the new Ministry. The noble Lord mentioned that it was the intention in the long run that there should be one single network of offices throughout the country covering both the old National Assistance activities and the National Insurance activities, but will the Commission be housed under the same roof as the new Ministry?
The second reason given for amalgamation is to ensure that those receiving contributory benefits will also get noncontributory benefits if they are entitled to them. But that does not need amalgamation at all. Provided that those administering the supplementary payments are told who is getting contributory benefits and what they are getting, they can ensure that perfectly well for themselves. The third reason is the development of a comprehensive service
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to the public through one point of contact for each person. What is that point of contact to be, even once one has got the two branches together? Will the noble Lord confirm that it is bound to be the local representative of the Commission? Is it to be the same point of contact for widows and retirement pensioners and for those drawing sickness benefits? What is the point of contact to be for those drawing unemployment benefit, who will at present go elsewhere? And what about the war pensioners? Is there to be one point of contact for them as well? I ask these questions because the administrative problem here seems to be much greater than is usually involved when Departments are amalgamated, and indeed bears much more closely on the public. I wonder how long the Minister estimates it will be before the merger is completed throughout the country? I am not talking merely of getting together in a single premises, but of how long it is going to be before the new set-up is being fully operated.
Before I finish, I will say two more things about the merger. There are two ways in which it could have been done. One way is that set out in the Bill. The other is to set up a National Insurance and National Industrial Insurance Commission as well as a Supplementary Benefits Commission, or perhaps three separate Commissions; war pensions would remain under the Minister. When I was considering the problem I inclined to that solution, although, needless to say, I received little encouragement for that idea from the Ministry itself. The point is that National Insurance is not so much an executive as a planning and supervisory function. It is not the Minister who decides the benefits to which contributors are entitled. It is the local insurance officer, who enjoys a virtually independent status. Appeal from his decisions lies not to the Minister but to an appeal tribunal and thence to the Commissioner. So the sort of questions the Minister decides, or those decided on his behalf, are much more limited. It seems to me, therefore, that the administrative functions of the National Insurance scheme could easily be put in the hands of a Commission, leaving the Minister to co-ordinate policy, carry out surveys, and so on.
That leads me to the second point to which the noble Lord referred. Ought

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not one Minister to be responsible for co-ordinating the policy on health, welfare and social security as a whole? Ought there not to be one point of contact at which guidance on all the needs of the citizen could be given? At the last Election the Conservative Party advocated:
"combining the Ministry of Health, Ministry of Pensions and National Insurance and National Assistance Board into a single department, with local officers who would have a positive duty to seek out those needing help whether in cash or care. The new department would have a research organisation to pin-point changing needs."
The Government have come some way towards that policy and have discarded some of the impractical fallacies which they advocated when in Opposition. But there is a need for continuing and coordinated research covering all branches of welfare and social security.
I think I have said enough to make it quite clear that the Opposition are in general sympathy with the proposals in the Bill, and to indicate the particular doubts and misgivings which I feel. I should have liked to see more done for the chronic sick: I still believe that the Government missed an excellent opportunity to do something for them in the Act which we passed in March, providing for earnings-related benefit for the temporary sick and unemployed. I still think that benefits for those struck down by lasting disease in the prime of life should be related to their past earnings. As the Bill stands, it is only when a person has been laid aside for two years that he will get even the additional 9s. without test of special need. No special provision seems to be contained in the Bill for the disabled and the chronic sick, apart from the blind. This, also, is a matter which we shall want to look into further.
I do not propose to talk about the wage-stop, because I do not myself believe that it could have been dealt with in this Bill: but I believe that it should be dealt with in conjunction with it. It is clear that the increases provided for in this Bill will widen still further the gap between what the low-wage earner with a large family is receiving and what he would have received but for the wage-stop; and it will increase the numbers affected by it,
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which emphasises the need for action to be taken. To me, the most disappointing feature of the Bill is the absence of any special provision for those who were excluded from National Assistance and have seen the real value of their capital and income dwindling away as the cost of living rises and the value of Government securities falls. These old people will be the most difficult of all to persuade to apply for assistance, call it what you will.
Finally, I should like to pay my sincere tribute to the National Assistance Board, which has done a splendid job over the years in helping the needy, in rehabilitating those who had lost confidence and self-respect, and in distinguishing between the genuine and the not so genuine cases. I could not praise too highly the work of my noble friend Lord Ilford, Chairman of the Board for ten years. He has a wise head and a soft heart and his knowledge and experience are unrivalled. I hope that the merger will not mean that this admirable organisation of skilled and devoted people is to be broken up, but that the Commission will carry on where the Board leaves off. I feel that your Lordships would wish me to express our thanks to the noble Lord, Lord Runcorn, and the Board and to wish its successor well.

RHODESIA: THE EXPLORATORY TALKS
3.44 p.m.
THE PARLIAMENTARY UNDER-SECRETARY OF STATE FOR COMMONWEALTH RELATIONS AND FOR THE COLONIES (LORDBESWICK): My Lords, in answer to the Private Notice Question on the Rhodesian talks asked by the noble Lord, Lord Carrington, I should now like to give the reply made in another place by my right honourable friend.
The exploratory talks with Rhodesian officials have not been adjourned. Mr. Oliver Wright, a member of the British team, has returned to London to report to the British Government, but the talks are continuing.
LORD CARRINGTON: My Lords, I am grateful to the noble Lord. Can he give the House any indication of when we shall know that the exploratory talks

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have finished and that the proper talking will begin?
LORD BESWICK: No, my Lords. It depends on how the present talks proceed.
LORD REA: My Lords, can the Minister say whether these talks are proceeding with both sides in Rhodesia, or only with one?
LORD BESWICK: There are two sides to these talks.
LORD BALFOUR OF INCHRYE: My Lords, would the Government consider the position which arises as a result of the talks going on for many weeks and when, as nothing is said, there is much speculation? One can read one day that they have broken down, and one can read another day that they are successful. None of that can do very much good. Would the Minister consider seeing whether, while keeping the talks confidential, there could from time to time be some sort of interim statement as to whether any progress is being made?
LORD BESWICK: My Lords, I quite understand the noble Lord's point, but until there is progress, no statement can he made. I am sure he would agree that in the interest of getting some sort of basis for the further talks, it would be much better not to say anything as to what the present exchanges are.
LORD CARRINGTON: My Lords, the noble Lord seemed to think that my supplementary question was funny. It was not meant to be funny. These are exploratory talks, and after the exploratory talks I understand that there are going to be talks. What I was asking the noble Lord was whether he had any indication of when the exploratory talks would be finished.
LORD BESWICK: My Lords, the answer to that is, No; and I assure the noble Lord that I had no intention of being funny about a subject which I hope we both agree is not funny at all. But at this present time it is quite impossible to say how long the exploratory talks will continue.
LORD WADE: My Lords, may I pursue the question of my noble Leader a little further? May I ask the noble
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Lord whether any talks have taken place, or will take place, with those in Rhodesia, both black and white, who do not support the present régime? If Britain is to make it clear that she will adhere to the six principles, is it not important that there should be consultations with, for example, the Leader of the Opposition and with other representative bodies of opinion in Rhodesia?
LORD BESWICK: My Lords, I think it has been made quite clear before, that there is absolutely no reason why there should not be a full exchange of opinion between the representatives of the British Government and the Governor in Salisbury, and anyone else in Salisbury. This has been made quite clear by my right honourable friend and by the Prime Minister. But these particular talks were of course for a specific purpose.
BARONESS HORSBRUGH: My Lords, the noble Lord said that when there had been any progress a statement would be made. Does he imply, therefore, that at present no progress has been made?
LORD BESWICK: My Lords, what I was implying was that there may come a time when it will be appropriate to make a statement, but that time has not yet come.
LORD GRIMSTON OF WESTBURY: My Lords, could the noble Lord give some undertaking that there will be a more positive statement before the House rises for the Summer Recess?
LORD BESWICK: I am afraid, my Lords, that I am not in a position to give that assurance.

MINISTRY OF SOCIAL SECURITY BILL
3.47 p.m.
Debate on Second Reading resumed.
LORD AMULREE: My Lords, I should like to give a welcome to the Bill which is now before the House, because I think it will do something to relieve a certain amount of the very great deal of poverty which we know exists in the country at the present time, particularly among elderly folk who are pensioners. One of the points I should like to make is that I hope very much that the co-operation, which the noble

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Lord said he hoped would occur, between the Ministry of Health and the welfare side will really take place in as big, a way as possible. Certainly, the conviction has grown on me since the National Health Service Act and the National Assistance Act were passed—I am not sure whether I felt it at the time—that there is no real official link between the two services which were available. This has led to a certain amount of difficulty in the past, and I trust that this co-operation will now take place.
It certainly is a mixture of ignorance and pride which has kept a great many old people from applying for the supplementary pension from the Assistance Board which they could have. But there is another point which has been touched on: they do not like doing something different from what their friends do. I am sure they would prefer that there should be but one kind of book to cover both kinds of pension, instead of two books that look different. It sounds rather illogical and not very sensible, but it may do more than many think to overcome some of the difficulties of old people applying for supplementary assistance. It does not matter whether the post office official knows the books are different; the fact that they look the same will, I think, be of very considerable importance.
The attitude of the officers of the National Assistance Board has certainly not been a factor in that connection. Those who know them will agree that they have done a magnificent job extremely well. I am pleased to see that we have in the House at the present time two former Chairmen of the National Assistance Board, one of whom is going Ito speak. He will be able to say more for the officers than I can. I should merely like to say that, as a result of my own contacts with them, I have an enormous respect for the work they have done and a great admiration for the way in which they have carried out what from time to time has not been a very simple task.
I am pleased to find that one of the procedures to be established is that so far as possible the officers should visit people in their own homes. I agree that some old people would rather not be
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visited: they may be able to go to the officer. But one of the reasons why some old people cannot go to the officer of the Board is not that they do not want to go; it is that, physically, they cannot. There comes a time when old people are unable to proceed from their homes to the Board, even though it is only a comparatively short distance away; and this applies particularly if there is no public transport available. That is why I think it important that the officers of the Ministry of Social Security should do as much visiting as possible. After all, going back to the days of the Poor Law, a really good relieving officer did a great deal of good in his district because he visited people and knew them. I am very pleased to find that the emphasis is again going back to visiting people in their homes rather than suggesting, albeit in a perfectly kindly way, that they should go to the officers.
There is another point in the Bill about which I am not entirely certain and which I should like to put to the noble Lord who is to reply. I have already told him that, regretfully, I shall not be able to stay to the end of the debate: but if he would not mind I should like to nut this question to which he may reply in his speech; or, if he prefers, get in touch with me on another occasion. What is the value of the guaranteed income at the present time? The sum to be assured for a single person, including his rent, is going to he, I think, £6 that is, £4 10s. plus £1 10s. for rent. The sum of £4 10s. is not an unreasonable one at the present time but will there be some kind of provision for that to be increased if the cost of living goes on rising and the value of the pound continues to fall? Or will it be necessary to come back to Parliament again every time such a thing becomes necessary?
I should have liked rather to see these sums fixed either to the cost of living or, possibly, to the rate of wages. I do not know which is the better of the two. This would save a great deal of Parliamentary time, and some complications. Wages paid in many parts of the country are still not high enough to enable people to make any substantial allowance for their old age. I have always looked forward—perhaps in rather an optimistic way—to the rime when wages would

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be such that the need for big retirement pensions would wither away (as the State is supposed to wither away in the truly socialistic country), and when the only need would be to have some fund available for people who were unfortunate or improvident. There is no great encouragement for thinking that that state of affairs is coming about at the present time; but I think it is something we could look forward to when wages rise to a proper level.
My Lords, there is another question I should like to put. It is not very clear in the Bill, nor in the White Paper that accompanied the Bill. What is to be the position about the earnings rule for pensioners under the Bill when it becomes an Act? In the Bill as it stands, Clause 8 says that a person shall not be entitled—I am not sure whether it is a pension or a temporary benefit—if he is engaged in full-time remunerative work. Does that mean work which must bring in a certain amount of money? One can have full-time remunerative work which does not necessarily come up to the earnings rule at the present time. At the same time, one wants to encourage people to go on working at some kind of work for as long as they can. I think it is good for people to have something to do, rather than doing nothing and just waiting for the time to come when they can go and pick up a pension. I wonder whether it is possible for the noble Lord to give some kind of information about the position of the earnings rule under the new Bill?
There is one further point I am not quite clear about, although it is a comparatively minor point. Clause 14 says that benefits in kind can be given if the Commissioners think it the right thing to do. Could the noble Lord explain a little further what that means? To me it sounds suspiciously like giving relief in kind as in the old days, which was not always a satisfactory way of dealing with people's troubles and deficiencies.
There is one further point. I think it was said in another place that under this Bill there were quite a number of families—200,000 or more—who, if they were unemployed, would get a bigger income than a family where the father or mother is a wage-earner, in a not very well paid industry; that with the full family allow-
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ances the unemployed person would get a bigger income than the employed one. Surely that is carrying the doctrine of "lesser eligibility", as it was called under the Poor Law, in a curious, reverse kind of way. I wonder whether the noble Lord could tell me whether that is true and, supposing that it is, whether the time has not come when under some Ministry, it may be the Ministry of Social Security, there should be a complete review of the size of the family allowances, so that the person who is being paid a low wage will get a big enough family allowance for the children that will not be less than that paid to a person with a big family who, through no fault of his own, is not in employment at the present time. Those are one or two of the points that I should like to put to the noble Lord. Apart from those, I think that this Bill is a good Bill, and that it will do a great deal to tidy up rather difficult points in the social security system of the country at the present time.
4.0 p.m.
LORD TAYLOR OF MANSFIELD: My Lords, it is a privilege to have the opportunity to address your Lordships for the first time, particularly so soon after my introduction. I ask for your Lordships' indulgence; and if there are any external signs of trepidation, then I am sure that on an occasion like this your Lordships will understand and, with your customary generosity and forbearance, will accept the position. I must confess to your Lordships at the outset that while sitting here last week and to-day I have experienced many personal reflections and reminiscences. I recall that during the war and for a number of years afterwards your Lordships' House was generously put at the disposal of the House of Commons; and, because of that, for me many memories abide.
I recall quite well—and I am sure many of your Lordships do—that it was in this Chamber that the four Bills which constitute the basis of our Welfare State were introduced—and it may he that at some future date historians will comment upon that particular fact. But that was twenty years ago; and at that time I thought—and I see no reason to change my mind to-day—what was embodied in those four Bills could be summarised in

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this way: that it was a new venture into the social field, based on the Beveridge Report. I would add that to me, and I know to many others, the introduction at that time of those four measures was the expression of an act of faith in the resourcefulness of the British people and of their determination to make better provision for the elderly; for those who were the victims of adversity, whether it was through sickness or unemployment, or because they were the casualties of war or industry; and, last but not least, for the physically and mentally handicapped.
I regard that time, twenty years ago, as the beginning of a new chapter in our social history—our determination to grapple with the problems of poverty and financial inadequacy in a time of adversity. It was the marking out of a new path leading towards the better treatment of the elderly, the sick and those who were the victims of disease and industrial accident. I believe that at that time the nation expected the changes embodied in those pieces of legislation. What is more, not only did they expect it, but they deserved it—and they accepted it, too.
My Lords, I do not want to go on too long, as this is my maiden speech, but on the subject of social insurance and the many problems that surround it it is difficult to know where to start, what to put in and what to leave out. However, there is one thing I will say which arises out of the situation twenty years ago, and that is that, I am sure I am right in saying, at no time was it thought by any reasonably-minded person that that legislation marked finality in the evolution of the social services. Furthermore, at no time was it contemplated that changes would be undesirable or unnecessary. Infact, this view was embodied in Clause 40 of the National Insurance Act 1946, which makes provision for quinquennial reviews. My Lords, I am one of those who believe that the most constant thing in the world is change itself.
It is true—and I think we should remind ourselves of this—that over the years the rates of benefit have been reviewed and increased, but it is rather sad to have to relate that little attempt has been made to alter the structure of National Insurance so that it can meet
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the needs of the 'sixties as it was intended to meet the needs of the 'fifties. The altering of the structure of National Insurance is, in my view, a prime necessity to ensure that our social services of twenty years ago fit into the social pattern of to-day. Since 1964 there has been a disposition—there has been more than that, my Lords, very obviously; there has been substantial evidence of it—for the Government to give attention to this matter. We have concrete evidence that this is so. In the autumn of this year we shall have the wage-related benefits for unemployment and sickness, and we have the promise that, in the lifetime of the present Parliament, we shall have a wage-related superannuation scheme. Were this not a maiden speech I should be strongly tempted to make some observations about the Graduated Pensions Scheme of 1961, but I must not do that to-day.
Now this Ministry of Social Security Bill comes before your Lordships for its Second Reading. I want to congratulate the Government on, so early in their life, and in spite of the many preoccupations they must have, putting forward their proposals for a new approach to the poorest section of our community. The survey to which reference has been made, and which has recently been announced, has, I think, caused distress to almost everybody interested in this subject. To learn that 750,000 retirement pensioners are living below National Assistance level can bring no comfort to anyone, I am sure. But the survey does not reveal only the numerical magnitude of the subject: it also indicates the reasons why. May I just reiterate them? I think they are worthy of repetition.
First, there is pride, and then there are misunderstanding and lack of knowledge as to what their rights under the National Assistance Act have been. I should like to put on record my opinion that, apart from the financial improvements proposed in this Bill, injury to pride will be a much less valid reason than hitherto for not applying for supplementary pensions and allowances.
My Lords, I believe that this Bill, with the necessary publicity which it should and must have, will prove an instrument for reducing the number of those who, for the reasons which I have given, have not applied for benefit. I do not think that

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there will be any disagreement when I say that any attempt by anybody to remove the spectre of poverty and insecurity, especially among the elderly and handicapped, not only is praiseworthy but deserves to succeed.
May I now make one or two brief references to the Bill? I know that it proposes administrative changes. We shall soon be attending the "funeral rites" of both the Ministry of Pensions and National Insurance and the National Assistance Board. I think that is a good thing, and long overdue. To have the whole administration of contributory and non-contributory benefits in one Department is, in my humble judgment, an excellent idea. As I see it, the motive is first-class, and it will, I think, mean the removal of a barrier which undoubtedly has been responsible for the hesitancy of a large proportion of those 750,000 people who did not apply for benefits to which they were entitled.
I noticed that the noble Lord, Lord Bowles, referred to a suggestion, current in some quarters, that the Ministry of Health should be brought into this proposed scheme of reorganisation. The Government do not agree with that, and I think they are right. I will give only one reason. The Ministry of Pensions and National Insurance and the National Assistance Board have been, and still are (it has been one of the characteristics of these two Departments), concerned with cash benefits. The Ministry of Health has been concerned with benefits in kind.
With the proposed demise of the two Departments, by name, it would he remiss of me not to take advantage of this occasion to place on record my appreciation of their work and pay my tribute to the officers and staff of both Departments; and especially to the two local officers in my native Mansfield, with whom I have had a very close association over a long period. During that time I have been impressed by the attitude displayed by the staff when applicants have come for advice or have made application for the many benefits disbursed by these two Departments. People with problems, and in adversity, have been treated as men and women, as human beings, and not as numbers on a card.
My Lords, there is much in this Bill which merits mention, but it would take
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me too long, particularly in a maiden speech, to comment on the many things upon which I should like to comment. I will say merely—and this summarises my attitude to the proposals contained in it—that the Bill is a good one. What I like is that one can see a pattern emerging more clearly in the sphere of social security. One thing I do not like about the Bill (I know that this is a vexed question, and I do not propose to go into the merits or demerits of it this afternoon: it has been referred to) is the question of wage stop. No doubt other speakers will refer to it.
I am anxious to make an observation on one point in Clause 4 where we read that:
"Every person in Great Britain of or over the age of sixteen"
can be an applicant for these benefits. I thought in 1948, and I see no reason to change my mind now, that the age should be changed to fifteen. My reason for saying so is that fifteen is at present—though for how long one does not know—the school-leaving age. I am now thinking particularly of the physically and mentally handicapped, who are a burden on the domestic income of their families and a strain on the care and love of their parents. It would be admirable if the Government could make this concession so that it would be possible for application to be made for these benefits at the age of fifteen.
Before sitting down, may I thank the noble Lord, Lord Drumalbyn, for his very kind reference to myself. It has certainly been with some trepidation that I have spoken, because, looking around your Lordships' Chamber, I see so many people who have been actively connected with the Ministry of National Insurance and who have wide knowledge and experience of its work. I have no doubt that as this Bill goes through its further stages in your Lordships' House we shall benefit from the experience and knowledge of those noble Lords.
4.19 p.m.
LORD ILFORD: My Lords, it is my first task this afternoon—a very agreeable task—to offer the congratulations of your Lordships to the noble Lord, Lord Taylor of Mansfield, who has just addressed your Lordships' House for the first time. I was one of those who sat in this Chamber in company with the

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noble Lord in the days when this Chamber was occupied by the Commons because another place was not available. We learned in those days that the noble Lord possessed a powerful and forcible expression and a lucidity of speech which was always welcomed in our debates, as they will be welcomed in our debates here in your Lordships' House. I recall very well the debates we had in those days, at the very climax of the war, upon the principles on which those four Bills were based. I am sure that the noble Lord will concede that in those debates both sides proclaimed the principles upon which those Bills were eventually based. I hope that the noble Lord will not hesitate to address your Lordships' House on many occasions. He asked for your Lordships' indulgence, but, indeed, no indulgence is necessary. I can assure him that he will always be welcome whenever he desires to take part in our proceedings.
This Bill is primarily an administrative measure. I think that the noble Lord, who began by describing the administrative changes which it is proposed to make, recognises that that is its principal purpose. Of course it makes other changes, in the administration of supplementary payments, and it improves the position of those who receive them in many directions. Nevertheless, it is primarily an administrative Bill. The purpose is to set up a new Department for the administration of social service benefits of all kinds. Perhaps I may say a word or two about the administrative aspects of this Bill before I come on to other matters.
The National Assistance Board and the Ministry of Pensions and National Insurance are now to be combined in a single Department. That is going to be a very large Department, indeed. I estimate that it will have a staff of administrative personnel of something like 50,000 persons.
LORD BOWLES: My Lords, may I interrupt the noble Lord? I mentioned the figure of 56,000 in my speech.
LORD ILFORD: I am obliged to the noble Lord. I am afraid that I missed that. My estimate is apparently a little below the mark. No other Department employs an administrative staff of that
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magnitude. There are, of course, other Departments which employ larger staffs, but they are, in the main, industrial and not administrative staffs. These new Departments administering directly social services, although we have got very accustomed to them, are still new. No Department administered a social service directly in the days before the war. It is a post-war development. In this Department, I think it is very necessary that the Minister should be close to the lower levels of the administration. I think that it is very desirable that the Department should not be so great that the Minister necessarily loses touch with the work of the service at its lowest level. I have not the least doubt that successive Ministers, by their energies, will overcome this difficulty, but I believe that it is a real difficulty.
The other comment I would make on the administrative side of the Bill is this. In the course of his speech, the noble Lord spoke of a chain of local offices, and said that it will be necessary in every town of any magnitude to have a local administrative centre for all these services. It will be a long time before the existing offices can be brought together. The condition of office accommodation in most towns in the Provinces is very difficult, and it is exceedingly difficult to get office accommodation of the size that will be needed to accommodate the joint local staffs of the two Departments. I am afraid that the Government will have to look forward to quite a long period when there will be in many towns one office from which National Insurance is administered and another from which the supplementary benefits will be administered. Of course, it may be possible to combine the two offices. That will be an administrative task of considerable magnitude. The Government will have to determine what the prospects of getting suitable office accommodation in provincial towns are likely to be, and whether it is better to wait until suitable accommodation is available or undertake the considerable task of combining the existing offices into a new combined office.
There is one other administrative matter about which I should like to say something. I am glad the Government have recognised that these services involving the assessment of individual need can

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best be performed by a body with a measure of independence and that the administration of these services ought not to be the direct responsibility of a Minister in Parliament. The proposal is to include within the new Department a Supplementary Benefits Commission which will be responsible within the Department for the administration of these supplementary payments. I regard that as an ingenious solution. I confess that if I had approached this problem myself, I should have preferred to continue the Commission arrangements. I believe, as my noble friend said, that the Ministry of National Insurance could well be broken up and its component parts entrusted to commissions. I would not claim that all the work of the Ministry of Health could be broken up in that way, but I am quite sure that part of it might he. Perhaps I am a little prejudiced—not unnaturally—in favour of the commission structure of administration. I believe that it has worked well, and rather than create this new Department of quite exceptional size, I should prefer to have a look at least at the proposal for breaking up the administration of these services and entrusting them to commissions with a substantial measure of independence. A real Minister of Social Security would then have been possible.
Whether the new arrangement will work as efficiently as the existing arrangements have done with an entirely separate National Assistance Board, only time will show. The difficulty about the present arrangements which exposes them so readily to criticism is that to the outsider they appear to he a very untidy and rather illogical form of administration. But when one has seen the machine, and has had experience of its working, one recognises that, whatever its faults may have been, it has provided an efficient and effective service for the administration of supplementary benefits of this nature.
Let me pass now to something else. It is, I think, interesting to observe that it has not been found possible to dispense with the test of means and of needs—because that is what it is today—in assessing these supplementary benefits. It seems now to be acknowledged that a uniform rate of benefit cannot be made to meet the needs of all; and, indeed, when one looks at the circumstances, it
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is quite clear that no uniform rate of benefit can hope to meet the needs of everybody, without supplementation. Take the position with regard to rent alone. The National Assistance Board at present, strange as it may seem, have no less than 114,000 persons paying rent of 10s. a week or less; at the other end of the scale, there are 20,000 people paying rent at the rate of 70s. a week or over; and between those two extremes there is a great variety of different rent levels. No flat rate of benefit which is practical administration could attempt to meet the needs of a person who is paying only 10s. a week for rent and the needs of a person paying over 70s. a week for rent.
Then there are the numerous personal needs that at present are met by discretionary additions. Some families may have to meet expensive diets prescribed by the doctor. Some require extra warmth; some window cleaning. The variety of needs is infinite, and their magnitude is equally various. For that reason, and for that reason alone, it has always been obvious, much as people have struggled against it, that no flat rate of benefit which really did justice to the needs of everybody was a practical proposition. This now seems to be generally admitted. Much as we dislike the means test, and much as noble Lords on the other side of the House and their friends have spoken against it, the means test is still with us and will have to remain with us. The real problem is to induce people to accept it.
I am glad that the system of interviewing is to be retained. I believe that the majority of applicants to the National Assistance Board to-day prefer it. Old people are not very good at filling up forms; indeed, none of us is particularly good at it. I receive forms from the Ministry of Pensions and National Insurance, and I know the immense care which has been bestowed upon them to make their meaning clear to the simplest intellect. But, even so, I often have considerable difficulty in finding the right answers, and the local officer sometimes sends the form back to me and asks me to correct it.
I do not feel that the interview is resented. What is disliked is that the Board's officer has to come to the house and people recognise him. Of course,

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that was an objection in the days of the Poor Law. Everybody knew the relieving officer—indeed, the relieving officer courted publicity, and wanted to be known—and everybody knew when the relieving officer went to the house. But it does not happen quite like that with National Assistance, because the officer who goes to the house is not always the same person. One can perhaps overstate the objection to the interview. In any case, a new way has been found of getting over this difficulty: you can make an application on a form. But there must afterwards be an interview. So that, even with this new means of modifying the means test and making it more acceptable, a test of needs and means still has to be carried out. But, as I say, I do not believe these interviews are resented. I have been present at a good many interviews of this sort where a means test has been applied. I have never observed any sign of resentment, and the questions have always been answered quite happily and cheerfully.
There is one matter I should like to mention concerning assessment before I pass on to other things, and which I hope the noble Lord who is going to reply to the debate will be able to clear up. At present, when the rate of basic pension is increased, the Assistance supplement is decreased by a corresponding amount, so that while the applicant continues to receive the same income, he does not get any benefit from the increase in the pension rate. I am not at all sure what the position is about that under this Bill. Is it intended that where an increase in basic pension rate is made there should be a corresponding reduction in the supplementary benefit? Paragraph 5 of the White Paper says:
"The assessment may be varied if there are exceptional circumstances; but in the case of a claim to supplementary pension the amount due may be increased by the Commission but may not be reduced."
Does that mean that where there is an increase in the basic pension rate the supplementary benefit will not be reduced by a corresponding amount; or does it mean that the existing practice, by which when one goes up the other comes down, is to be continued?
I must say that if the latter is the case it does, I think, take some of the attrac-
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tion out of the guaranteed minimum income. What really upsets the pensioners is that they read in the newspapers that they are going to get an increase in pension, and when the books are adjusted for them, there is no increase at all, unless the National Assistance Board has increased its scale rate, which it has usually done. I think that lesson was learned in the early days of the Board. I hope the noble Lord will be able to explain to me what is intended.
May I now say a word about the 9s. addition? As I understand it, it is intended to replace the discretionary additions which the Board's officers make at present in order to meet all sorts of minor personal payments for additional coal, for cleaning the windows, for the doctor's diet and for all manner of things. Some of these discretionary payments are quite substantial. The 9s. is intended to cover them, and I agree that it is a convenient administrative arrangement. But the average discretionary addition last year was 9s. 6d., and I think that means that most of the persons receiving discretionary additions will need some further supplementation if their need is to be met in full. I think the noble Lord said that it was based on the average amount of the discretionary additions.
LORD BOWLES: Yes, I did.
LORD ILFORD: Two years ago it was something like 8s. 10d.; it is now 9s. 6d., and I think that means that there will have to be some further supplementation of most of the supplements paid to persons in the classes which receive this addition.
I should now like to say a word about the wage-stop. I think the wage-stop was a greater cause of anxiety to me when I was Chairman of the Board than anything else. It always seemed to me to be wrong and illogical that we should be paying somebody an allowance which was less than the sum that we had fixed as necessary to maintain him and his dependants in reasonable comfort. Yet on the other side of the picture the alternative was even more alarming, that we should begin to supplement wages; because that is what we should be doing if we paid more than he was able to earn when he was working. I do not think that this is really a problem for the payment of supplementary additions. If there is a

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solution to this problem, I think it is to be found in some readjustment of Family Allowances. I do not want to be drawn into that discussion this afternoon. It is a real and substantial problem. It gave me great anxiety, but I do not think that one can claim that it is the Board's scale rates which are reducing the family to poverty. The Board's scale rates are maintaining him at the level to which he was accustomed when he was earning; it was his low earning power that was the real cause of the problem.
I think the Minister attaches great importance to the question of names. The name "National Assistance" has gone. When I was Chairman of the Board, a good deal of pressure was put on me from time to time to change the name of the Board and to give up the name "National Assistance". I took refuge in the words of St. Chrysostan:
"It is not names that give confidence in things but things that give confidence in names".
Our purpose on the Board was to try to create something which would attract the attention of the public, whatever its name might be.
In this matter of names, there is quite a long back history. "Out relief", as it was called in the old days of the Poor Law, became identified with all kinds of unpleasant associations and accordingly, when the old Victorian Poor Law was swept away in 1929 and the duty of maintaining poor persons passed to the local authorities, the name was changed to "Public Assistance". By 1948, the name "Public Assistance" was attracting the same unpleasant connections as "outdoor relief", and accordingly that was changed to "National Assistance". Now we are told that it is the name "National Assistance" which stops people who ought to apply from doing so. I do not myself believe that whatever name is chosen has much to do with it. It is the fact that the payment is made upon a test of means and needs which keeps people away. What we must do is not to change the name for something superior, or something which we hope will be superior, but to reconcile people to the fact that an adequate supplementary payment can be made only as a result of a test of means.
Before I conclude, I want to pass on to two other matters. The Supplemen-
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tary Allowances Commission will have the responsibility for reception centres and rehabilitation centres. The Minister without Portfolio spoke at some length on this subject in the speech which he made in the Debate on the Address in another place last November. When the National Assistance Board came into being, it inherited a large number of reception centres from the local authorities. Most of them were in fact the old casual wards of the institutions, which the authorities were trying to convert into modern old people's homes or hospitals. The presence of these reception centres was bitterly resented by local authorities and the hospital authorities and, indeed, they were places of which no department could be proud. They were in truth and in fact the last relics of the Victorian Poor Law, although nobody recognised them as such. I closed nearly all of them, and well-meaning people wrote to me and blamed me because the reception centre in their town was shut and there was nowhere for these poor people to go. My answer was always the same: "Did you ever see the reception centre when it was open'?". They never had. However, they are gone and the Board experimented with centres of a different type. The principal difficulty is to get the people to go to them.
They are certainly a strange body of men. Some are the old-fashioned tramps of days gone by, with long whiskers, newspaper tied around their legs—the old "Weary Willy" and "Tired Tim" of our childhood. Many of them are much younger but seem to be living a curious, secretive life of their own. I think they have only one characteristic in common: they all seem to be running away from something. Some are running away from their work, some are running away from the police, and I regret to say that a large number are running away from their wives. They are a class which it is very difficult to help. Many of them want no more than a doss-down for the night; and doss-down under the most squalid and disagreeable conditions, so long as they are asked no questions; a cup of tea, another cup of cold tea in the morning and then to get up and go, without any bother. That is what many of them want, and the Board has provided that

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with this accommodation. But that is not what the Board wants. What the Board wants is somehow to restore these men to the ranks of self-respecting citizens. I think we had a modest success in doing that. I hope the noble Lord will be able to tell us how that work is progressing. I understand that a survey is being made, and when it is published no doubt action will be taken on it by the Government. How many of these men there are nobody knows, and it is quite impossible to make an estimate; but that there are a substantial number I feel fairly confident.
One other matter on which I should like to say something is the question of visiting. There are two sorts of visiting. There is the visit which is intended to detect financial need. That, clearly, is the task of the Ministry of Pensions and National Insurance and of the National Assistance Board, and it will be the task of the new Department when it comes into being. Then there is another class of visit to which I think the name "welfare detection" has been given. These visits are intended to ascertain whether the applicant is in need of the services of one of the public welfare services provided by the local authority or the hospital authorities; and, of course, these people are very much more difficult to find. I do not know whether any decision has been reached about the carrying on of this welfare-detection visiting. My own view, perhaps, not unnaturally, is very strongly that this visiting ought to be done by the visiting staff of the new Department. The visiting staff of the local authorities are in the main technical staff, and in a great many cases their services would be wasted. I am quite sure that the work of welfare detection could very easily and very efficiently be carried out by the staff of the new Department, and I hope the decision will be taken that the new Department should undertake this task as part of its responsibilities.
Before I sit down I should like to thank my noble friend Lord Drumalbyn for what he was good enough to say about the staff of the National Assistance Board, and also include in my thanks the noble Lord, Lord Taylor of Mansfield. I am glad that he is on such good and intimate terms with the local
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manager of the National Assistance Board.
Naturally, I look back with certain nostalgic sentiments upon an organisation with which I spent ten years of my life. This Bill is intended to remove some of the difficulties which our experience with the National Assistance Board has brought to light. It is an experiment which I hope profoundly will succeed, and if I have sometimes appeared in my observations a little critical of the Government's proposals I hope that the noble Lord who is to reply will not accept my criticism in that sense. I wish this scheme well. I believe that it will prove to be a good scheme, and if it does not prove to be a good scheme we must do what we did with the earlier scheme—alter it.
4.54 p.m.
LORD SOPER: My Lords, may I add to the words of congratulation given by the noble Lord, Lord Ilford, to the maiden speech of my noble friend Lord Taylor of Mansfield, as much for the spirit in which it was delivered as for the content, which was so pertinent to the matter in hand. I welcome the two propositions to which my noble friend attached himself: that this is an extension and development of something which in itself is intrinsically good. I welcome this Bill because it is an extension of the Welfare State, and, so far as I am concerned, the Welfare State is the most Christian thing that has happened in my lifetime. I am sure that were my ecclesiastical friends here in physical frame as in spirit they would accord to this Bill the same general assent as a means towards a more just and equitable society and a process in the general programme of kindliness, of care and of mutual responsibility.
But if my noble friend Lord Taylor of Mansfield will allow me to borrow another of his phrases, he claimed that this particular Bill is a new development in this process of the Welfare State, and to that I most cordially agree. It is for the especial reason that I think it breaks new ground that I, for one, have the heartiest feelings of commendation as I speak to it. The noble Lord, Lord Drumalbyn, ventured into the field of semantics and inquired of the first Part of the Bill, what, in fact, is in a name; and the noble Lord, Lord Ilford, in his

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very pertinent remarks on this theme, pointed out that a name is cogent or viable only inasmuch as it denotes a programme of action. I welcome this new name, and this new particular and quite distinct Ministry of Social Security, because I think that in the minds of a very great many people it denotes a new development, and therefore from a psychological standpoint, if that word is permitted, we must not underrate the fact that many people who are not particularly logical about these matters but who, nevertheless, are very sensible will take upon themselves a new spirit of confidence in something which, after all, may only he administratively in many of its respects a logical development.
I am a minister of a Church which, very properly, seeks to care for its old-age pensioners, and I tend to take a more practical interest in this particular attitude of the Church than once I did. When I become an old-age pensioner in the Methodist Church I shall be entitled to benefits that were once called by the inelegant name of "the worn-out ministers' fund." That phrase has now been changed to "supernumerary ministers," and there is the world of difference between my going with shambling gait and obsequious mien to plead my case as a "worn-out minister" and walking in to claim my rights as a "supernumerary. "It is very true that the difference is a preference for Latin over basic English, but I have enough experience, as I am sure your Lordships have, of the habits and attitudes of many old people to know that when once they are convinced, even by a name, that something new and better is on the cards, they will make the appropriate reaction. It has already been mentioned by the noble Lord, Lord Amulree, and others how many there are (and I can testify to this) who at the moment, for reasons which are not rational, look upon even the best efforts hitherto made as having something of the vestigial remains of charity rather than justice; and inasmuch as this new measure, by the very nomenclature, will tend to improve that situation, it is to be welcomed.
As to Part II, the same noble Lord, Lord Drumalbyn, ventured into the field of philosophical disquisition as to the relationship and tension between the problem of help and the problem of
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self-esteem, and he balanced, I think with some ambivalence, the respective advantages and disadvantages of giving people what they need and at the same time expecting from them what they can themselves provide. To me the great and challenging difference in this new Bill is that for the first time it comes unequivocably down on one side; and it asserts that the principle of giving people what they need must take precedence over any fears that may be entertained that they will abuse that privilege and that their own self-respect will suffer. In this respect, let us bury St. Paul, who by his declaration that, "If a man will not work neither shall he eat, "has done more harm than almost any of the other great classical figures of the Christian tradition. Ecclesiastically I would comment that St. Paul was not more inspired when he said this than when he invited slaves to obey their masters, wives to obey their husbands, or women to keep quiet in church. What we are considering is the inalienable right of human beings to food, clothing and shelter, whatever may be their moral quality, whatever may be their achievements.
After we have provided this inalienable right, then we have every right to expect from them an adequate return; but not before, and not as a consequence or as a preliminary condition. To me, this is how this Bill reads, and for that reason I am the more confident that it should attract your Lordships' enthusiastic attention and support. This is a continuation—if I may be permitted to trespass even further in what may appear to be the beginnings of a sermon—of the teaching that the lazy lily is nevertheless intended to be fully clothed, and the indigent sparrow, though it does not gather into barns, should have adequate provision for its physical needs.
I believe this Bill is essentially right. I find certain particular felicities in it of which I would mention one or two. It is, to me, extremely agreeable that in Part II, Clause 7, the Bill makes provision for the particular case and the exceptional case of those who need at a special time, not a graduated payment but a lump sum. It is my experience as a social worker that these exceptional conditions are extremely common, and unless a Bill of this

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magnitude and of this complexity is operated with this kind of dispensation, it will be in danger of losing itself in its own complicated arrangements. I find in Clause 14 a further exemplification of this principle, where it is provided that in certain circumstances, before adequate and proper investigations have been carried out, deliverances of services or goods in kind may, and should, be offered. For these reasons, the Bill seems to me elementary in its humanitarian rightness, and entirely, in principle, correct.
I would point, if I may, to one infelicity. I wonder how long it is going to be before we can bury the most unfortunate phrase "illegitimate children". I know that, strictly speaking, it can be defended but in another real sense there are no illegitimate children: there are only illegitimate parents. As one who has had something to do with caring for those who have to resist the trauma and shock of finding out that they are what is called "illegitimate children", I can say that it would be an immense advantage to those who have to do the telling. It would remove a great deal of unnecessary suffering if this phrase were once and for all buried. I hope that other and more felicitous words can be used to describe the condition which has hitherto been described as that of the illegitimate child.
Before I sit down I want to refer to a thorny problem which has already been adverted to: it is the question of the wage-stop. I wonder whether your Lordships will permit me to remind myself, and perhaps some of you, of the facts that lie behind the poverty of 300,000 families, according to the statement of the Minister of Pensions in another place on May 2. As the noble Lord, Lord Ilford, has reminded us, there are 300,000 families which live below the N.A.B. level, which is regarded as necessary for the sustenance of adequate livelihood. I wonder how many children are undernourished as a result of this particular condition. The society which calls itself the Child Poverty Action Group calculates that the numbers must be in the region of 600,000. If it is only half-a-million, I suggest that here is a continuing problem which is as urgent as the claim of other proposals which are made and which are carried out in many other places in this Bill.
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It is the argument, I understand, that an inquiry is now being held about the condition of these poverty-stricken children, and particularly about the sort of conditions under which, should the wage-earner fall out of work, he will not be in receipt of the full amount which otherwise would be paid to him. In Schedule 2, Part V, you will find that the amount of benefit that will be given to him must not exceed that which he would have been in receipt of as wages if he were in employment. This, of course, is quite scandalous. It may be that there is no opportunity to deal with this manifest iniquity in the existing clauses of this Bill, but I heartily agree with what the noble Lord, Lord Ilford, said, that there ought to be a measure whereby, through family allowances and children's allowance, tax free, this particular enormity should be redressed.
There is, however, another reason which I think is less reputable, and that is the reason offered that if the wages are lower than the N.A.B. rates and the wage-earner falls out of work, to offer him more when he was out of work would be improper, because it would encourage a state of laziness and would contribute to a condition under which he would not himself seek to—
LORD ILFORD: My Lords, I did not say that. I did not say that it would encourage a state of laziness.
LORD SOPER: My Lords, I apologise to the noble Lord if I misrepresented him. What I was endeavouring to state was that I understood him to say that there is a condition under which this sort of thing prevails. But if that is not so, then let me quickly apologise and pass on. What is beyond dispute—and I am sure the noble Lord will agree with me—is that here is a problem which cannot rest where it now stands, and therefore there must be some way of dealing with it, either within the framework of this Bill or in some analogous operation. Otherwise we shall be failing to interpret the spirit and temper of the Bill to secure for all people, as of right, a closing of the gap between that which they have and that which they need to have. Therefore, I would commend to Her Majesty's Government reconsideration of the wage-stop, not because it is of simple and easy solution, but because

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it is a contradiction of the principle to which the rest of the Bill is dedicated.
Finally, I say that this is a good Bill, alike from what I believe to be the Christian standpoint, the humanitarian standpoint, and, I believe, the administrative standpoint. But if the hand has been now put to this particular plough, and the field is the right field in which to do the ploughing, then, in the matter of the wage-stop, I would earnestly invite my friends in the Government to seek to complete the furrow and so to contribute to the great social issues one more solution which I believe will be a light to any radical Government and a contribution to welfare of the community as a whole.
5.8 p.m.
LORD MITCHISON: My Lords, in a moment I am going to follow that up, if I may, and agree most cordially with what my noble friend has just said. But I should like first of all—and I am sure that here, at any rate, I have the whole House with me—to say how we all agree with the words of thanks and praise which were given to Lord Taylor of Mansfield for his maiden speech. It is only quite lately—I think within the last year or two, although I have known my noble friend for far longer than that—that I have got to Mansfield. Mansfield is rather a nice place, and the nicest thing about it when I was there was the feeling that everybody in Mansfield had for their Member, and I know will still have for him. I hope that any good Member will get along well with his constituency; but to get along so well as that, and to have that warmth of feeling from everyone in it, is, I think, a rather remarkable achievement. He is one of those happy people who can translate the complications of modern life into the warmth of the humanity that he most certainly has.
My Lords, I, too, support this Bill most warmly. I am not much frightened by the suggestion that the guaranteed income involves a means test. It always did. I am suffering from a means test now, being rather late in completing the complicated form that I have annually to complete for the purpose of paying income tax. That, too, is a means test. I do not
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see how you can do in any other way what is intended to be done by the guaranteed income. The objections to a means test have largely been directed against a family means test, to a confusion between the various purposes which it was sought to meet by older legislation. It has been said that this is merely an administrative Bill. It is a very generous one, with £65 million being added to the benefit—or whatever I should call it—given by what wag formally National Assistance. Sixty-five million pounds is a lot of money, even in these hard times. There is no doubt that it ought to be given, and this Bill has gone rather rapidly through another place with not a word of objection to that side of it.
In view of all this, I am particularly glad to find one important little clause in the Bill. It is a clause that gives the Minister extremely wide powers, not only to amend the amount, but to do a good deal more in regard to the benefits. I refer to Clause 5(2), which provides that:
"Regulations under this section may vary the provisions of Part II of the said Schedule 2, but not so as to reduce any amount specified therein."
That is a very sweeping provision. It is subject to Parliamentary control, no doubt quite rightly, but it has relieved me of one anxiety which I felt at first, and that is as to the wage-stop. Previously, the wage-stop has always been embodied in regulations. On seeing the Bill, I said to myself "Goodness, they have now gone and put it into the context of the Bill"—and, indeed, it is in the context of the Bill: your Lordships will remember paragraph 5, in Schedule 2. Then I looked a little further and discovered that the Minister would have power to deal with a matter of this sort by the exercise of her powers under the clause to which I have just referred. That reassured me on that particular point, but it leads me to say a word or two about the lines on which I think the matter could be reconsidered.
Let us be clear where we are. We are not dealing with the exceptional cases; we are not dealing with the people who for one reason or another are unfit for employment; we are not dealing with the women who have the care of children; we are not dealing with widows. We are dealing simply with the people who would be dealt with under

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the practice of the Commission by Clause 11, which tells us that:
"The Commission may determine that the right of any person to a supplementary allowance shall be subject to the condition that he is registered for employment …"
If you look at the way in which the subsections are phrased, you will see that in fact it is only the people in the field of employment who are dealt with by it. Therefore, some of the criticisms which one might have made at first would be misconceived.
But there remains a problem which I thought the noble Lord, Lord Ilford, with his long experience of these matters, put very clearly. He said that there is a difficulty about this. On the one hand, if the wage-stop is retained, it means keeping a number of people on an allowance which, having regard to the character of National Assistance allowance, is not enough for them to live on. On the other hand, if you abandon the wage-stop, you are going to run into the difficulty, which was succinctly put in paragraph 13 of the White Paper, which accompanied this Bill. What is said there is that this Bill contains a provision
"to prevent a recipient of a supplementary allowance who is in the employment field from being better off while away from work than he would be if he were working full-time in his normal occupation."
That does not frighten me. What happens is this. The man is in work; he is under-paid; he is not getting enough to live on, and then he becomes the responsibility of the community. Do the community then say: "Because you were not paid enough in the past, we, the community, are not going to pay you enough to live on now"? I cannot think that that is right. I cannot believe that that is the sort of conclusion which would commend itself to any of your Lordships if you thought of the matter as a very clear moral and social issue. You are not justified in keeping people under a wage-stop on what is, by definition, not enough to live on because, owing to the conditions of employment or work, they have been living in that way for some time past. Goodness knows how they managed; but it is no reason to go on doing it.
Then it is said that this can be dealt with by a family allowance arrangement
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of some sort—this has been mooted for a long time. I was looking back at debates in another place and I see that in March, 1963, when I looked after this kind of subject in Opposition, the suggestion was made by the present Minister of Transport, and she was answered by Mrs. Thatcher. I was there at the time, but I felt that it was highly inexpedient to get involved in a discussion between two most intelligent and most vocal ladies, and therefore I said nothing. But I have always felt doubtful about this. One or two things my right honourable friend the Minister said in another place have made me even more doubtful, particularly one sentence to which I will call your Lordships' attention in a moment.
What the Minister said was that they were holding a quick survey of some two or three thousand cases, and on the results of the survey would decide what they were going to do. That may be. But, unfortunately, she went on to indicate quite clearly that in her view what was required was a family endowment scheme of some sort, a supplementary child's allowance, whatever it may be. I feel very doubtful about this, for the reason that it will not deal with a great many of the cases. There are already anomalies all over the place in this legislation—it crawls with anomalies. Well, all you are doing is to put in another one by dealing especially with children and by working it on the basis of children. I very much doubt whether that can be right.
One has to consider what the real trouble is. There are about 15,000 of these cases. There are between 200,000 and 300,000 people who, at present, are living on abnormally low wages, so that when they become unemployed, or suffer something which brings them within the purview of something like this Bill, they are subject to the wage-stop. The number actually affected is not nearly so large as the number of people who are continuing to live on too low wages. My right honourable friend accepted in another place, as I understood her, that one could not do anything about wages. This is what puzzles me. We do things to secure minimum wages—it is done in regard to agricultural wages and in regard to trade boards. There are, in fact, a large number of these trade boards, and

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I looked at a list of them to see the number of orders they made in one year. Some dealt with very hard cases indeed, and your Lordships will no doubt remember that the worst of all were the mineral-water bottlers in the Orkneys, whose wages were phenomenally low. That is the kind of matter which is dealt with in that way, but I hope that we are not going to give up the possibility of dealing with what is the real root of the matter.
Now I turn to the child endowment suggestion, and my right honourable friend had what I have just been saying very much in mind, because in col. 1919 of Hansard of June 17 she said this:
"The only way of dealing with the problem"—
that is, the wage stop problem—
"is by a better form of family endowment, whether a man is in or out of work."—[OFFICIAL REPORT, Commons, Vol. 729.].
I read that and then I went off to the Library and got Hammond's Village Labourer, and started reading again about Speenhamland. It was in May, 1795, that a collection of probably well-intentioned gentlemen met there. They decided that agricultural wages were too low and that they would therefore, supplement them out of the rates. The practice spread, the wages fell, as indeed one would expect, in all the areas where this curious doctrine prevailed, and I think there is no single action in the whole of British industrial history which has done more by itself to cause misery than what was done, probably with good intentions, by the gentlemen of Speenhamland. To make quite certain, I read again what my right honourable friend said:
"The only way of dealing with the problem is by a better form of family endowment, whether a man is in or out of work."
Of course, "out of work" covers the wage-stop case, but "in work" is intended to be a way of dealing with wages. It cannot be right, and I hope it is not going to be followed further.
I am anxious about this, and I believe that in the long run we must do something about it. We cannot leave a problem of this character simply by saying, "The consequences of doing anything, whatever we do, are too awful", because the system itself is causing the misery to which the noble Lord, Lord Ilford, testified and which I have heard spoken to
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time and time again in another place, largely by Members representing areas where conditions of employment were bad with low wages, probably areas of low employment. Of course, the position may get better; one hopes it will. But if it does not the wage-stop itself is dead wrong. An attempt to meet it by a family endowment scheme is going to run into the difficulty; either it will fail to cover the "in work" people, the 200,000 or 300,000, or it will repeat the catastrophic error of Speenhamland. We cannot have that.
LORD DRUMALBYN: My Lords, the noble Lord is putting his case very strongly, but is he seriously suggesting that those without families, the unmarried, are going to accept a lower wage, because people with families are getting higher family allowances? Only that is the implication of what he is saying.
LORD MITCHISON: My Lords, I can find no such implication in what I have said. After all, it is pretty simple. What is happening is that a number of people, married or unmarried, with or without children, are being grossly underpaid. Consequently, when they come on to National Assistance—using the old phrase for a moment—they find themselves unable to get enough to live on, because they are met by the wage-stop. What I am suggesting is that the right remedy for that, if you can manage it, is to bring up the wages that are at present far too low. One method of doing that is by agricultural wages arrangements, and trade boards is another. So far as I can see, there can be no objection in principle to that, and it ought to be examined far more closely. I see nothing wrong in trade boards or in agricultural wages arrangements, and both of them seem to be an exact parallel.
As regards the child endowment scheme, the difficulty is this, leaving aside for the minute the question of what one does when they are in work. Whether those concerned are in work or out of work, you are then going to give a benefit in terms of children and that may not be the right way of dealing with the matter. Therefore, I would far rather see it dealt with, if one can, by taking the total amount of wages. So far as the wage-stop is concerned, I should far

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rather see it simply cleared away as an immediate measure, rather than left where it is. I would rather face the difficulty mentioned in the passage which I read from the White Paper accompanying this Bill, than the alternative difficulty which is what we have at present—keeping a number of people on an allowance which is not enough for them and their families to live on. That cannot be right.
5.26 p.m.
LORD BROCKWAY: My Lords, this House is sometimes criticised for being too polite, but nevertheless I cannot refrain from expressing some appreciation of the maiden speech of my noble friend Lord Taylor of Mansfield, which was delivered to-day. Some of us were colleagues of his in another place and appreciated his contributions there. The breadth of his views as well as his detailed knowledge on the subject which we are discussing to-day, indicates how valuable he will be here. Unlike my noble friend Lord Mitchison, I have often been to Mansfield. Indeed, I think it was 55 years ago that I made my first visit there as a propagandist of the I.L.P., and even in those days Lord Taylor of Mansfield was one of the active comrades for the movement. It was a delight to hear his speech in this House.
Like, I think, every other speaker, I welcome the introduction of this Bill. It deals, in what is regarded as our now affluent society, with those who have been the forgotten tenth in our population. I suppose I represented in another place one of the most prosperous areas in the whole of the United Kingdom. I am not referring to Eton College; I am referring to the prosperity of Slough as an industrial centre. But no one who was a Member of Parliament, and who took opportunities week by week to meet constituents who were concerned about their personal and social problems, can have doubted that in our affluent society thousands of human beings—the old, the disabled, the injured, the chronically sick and, in some parts of the country, the unemployed—were existing on a level which was below that of any proper human existence. It is because it deals with those people that I welcome this Bill to-day.
The second reason why I welcome this measure particularly is that it is at least
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a movement towards securing in our community a minimum standard of life below which no human being will be allowed to fall. I am glad that my noble friend Lord Taylor of Mansfield is now here, because I can add one further point to what I have already said about him. He was engaged many years ago in the agitation in this country to secure a proper living standard for everyone. One of the effects of this measure (though I still think that it is inadequate and incomplete) will be to establish a human level so that we are able to say that in our society a person who is in need or in want will not be allowed to fall below that level.
I was very interested in the contribution which my noble friend Lord Mitchison made to this debate about the effect of this Bill on wage conditions. I think one of the advantages of the Bill is that it will have such an effect. By laying down a standard below which no one in need of public assistance shall fall, it will inevitably have an effect upon wages; and I entirely agree with my noble friend Lord Mitchison when he says that the Agricultural Wages Board, the trades boards and similar machinery for legalising wage standards will benefit by the introduction of the Bill. In other spheres, as my noble friend Lord Mitchison knows, it is difficult to operate because both the employers' organisations and the trade unions claim that those spheres are their own; but even there the introduction of this Bill will have its effect by establishing the principle of a minimum standard of life, so that we shall be able to say that no one in our community shall fall below it to a position of destitution.
My Lords, I want to draw attention to two problems particularly. I am very glad indeed that my noble friend Lord Sorensen is to reply to this debate, not only because of his own long service in these spheres but also, if I may say so, because of the fact that over the years his wife has been so active in all aspects of social service; and I am perfectly sure that her experience has contributed to his own knowledge. The first specific point to which I wish to draw attention is the position of the blind. They are the only recipients of National Assistance who will not, as blind persons, benefit from this Bill. At present, the blind in our community receive a special allowance of 24s. 6d. per week. In the original

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Act of 1948, the scale was 15s. It has risen by only 9s. 6d. since 1948, although the cost of living has risen by 90 per cent. It would therefore require to be brought up to 28s. 6d. to restore it to its original value. I have in my hand a letter from the General Secretary of the National League of the Blind, Mr. T. H. Smith, M.B.E., whose organisation has done so much in the service of the blind. He has asked me particularly to raise this matter in the House, and I hope that the Government will give some consideration to it before the Bill finally becomes an Act.
The second specific point to which I want to draw attention is with regard to the position of women who are separated from their husbands. Some of them receive a small maintenance grant from their husbands, and they often have a family to keep. As I understand it, a woman in that position has to pay tax on the maintenance allowance from her husband as if it were unearned income, although her husband is paying her out of taxed income. I want to suggest that such a woman, separated from her husband and looking after her children, is contributing to their welfare, irrespective of what she receives in children's allowances, in a way which ought to allow her to have a tax allowance equally with a married woman who is looking after children in her home.
The second point I want to raise in respect of the women separated from their husbands is this. A married woman living with her husband gets a personal allowance to set off against tax, even if she is working only part-time. A single woman or a woman separated from her husband gets no allowance for part-time work, and an allowance of only £40 for full-time work. I do not think I can put this better than by reading a letter which appeared in that admirable column which Lena Jeger contributes to the Guardian. She refers to Mrs. M., separated from her husband, with family expenses, receiving a small maintenance allowance. She has to go to work, and Mrs. M. writes:
"I have found to my horror that, whereas a married woman, whatever her husband's income, automatically gets an additional personal allowance to set off against tax, even if she only earns part-time, other women who have a need to work to keep their children can get no additional allowance for part-time work and only £40 for full-time work. I found I was paying more tax on the same salary than a
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workmate with no children, married to a man with a good salary and working only because home bored her".
My Lords, I recognise that in a comprehensive and complicated measure of this kind there are bound to be anomalies. I want to pay my tribute to Miss Peggy Herbison, who is the Minister in another place, and to Mr. Douglas Houghton, for the extraordinarily thorough way in which they have examined this whole problem and brought forward these proposals. It is because I know of the spirit in which they have approached their task that I ask for some consideration to be given to the two specific problems which I have raised this evening.
5.38 p.m.
LORD WINDLESHAM: My Lords, having listened to the debate this afternoon, and having thought about the Bill in advance, it seems to me that it can really be looked at in one of two ways—and this is how most noble Lords speaking in this debate have viewed the measure this afternoon. The first is from the point of view of the machinery for dispensing social welfare, and the second is from the standpoint of the nature and extent of the benefits provided for those who are in need and the criteria which are adopted to determine that need.
First of all, I should like to consider the reorganisation envisaged by the Bill in front of us. The reorganisation of a very considerable part of the social services in the public sector is effected here by the dissolution of the Ministry of Pensions and National Insurance and the National Assistance Board, and by the transfer of their functions to the new Ministry of Social Security. Since this Bill marks the end of the National Assistance Board in its present form I think it would be proper to take this opportunity to acknowledge the services rendered by those noble Lords in this House who have served as its chairmen: the noble Lord, Lord Ilford (from whom we have had a most thoughtful, wise and helpful contribution this afternoon); the noble Lord, Lord Runcorn, the current Chairman of the Board, and the noble Viscount, Lord Soulbury, who was in his place this afternoon and who, your Lordships may remember, served as Chairman of the Board for seven years. From these Benches I should also like to add my tribute to those paid to the noble Lord,

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Lord Taylor of Mansfield, on his maiden speech on this important measure.
My Lords, the Bill at first sight seems to provide a very similar service to that provided by the Ministry and the National Assistance Board—with a change of name. I do not agree with those who think—as the Economist did on May 21—that there is nothing more than a change of name here. Nor would I underestimate, in any event, the importance of changing the name of a system of public provision when the words "National Assistance" have taken on a meaning which I think is undesirable. I am sure that the noble Lord, Lord Ilford, is entirely right in saying that it is the system, and the confidence or lack of confidence that people have in it, that is most important; none the less, the words do seem to some people to have an undesirable association and I think they should be changed on those grounds.
There is an opportunity here for the Government to make substantial improvements in the administration of social security; there is opportunity also to improve the use made of manpower in the social services in the public sector and the use of premises which, we hear, are to be integrated into a single network. This is important, because greater efficiency in Government administration does lead to a more effective use of the social services; and, after all, that is the reason why the services exist. They should be used by the people for whom they are designed. I think it is unfortunate to find (and it is now documented) a situation of which noble Lords opposite are well aware: that there is a fairly substantial number of people who are entitled to supplementary benefits but who, for whatever reasons, have not been drawing them. If this Bill can improve the utilisation of the social services, then it will have made an advance.
When looking at the organisation of the new Ministry we come up against the question of communication; because the new Ministry (as we have heard from the noble Lord, Lord Bowles, in his opening speech) will be extremely large. In this connection, he mentioned the figure of 56,000 administrative staff. This is something which we might take up at a later stage of the Bill. I should like to ask the noble Lord who is to
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reply—not for answer now—if it is thought that there will be an increase in this number as a result of the merger, or whether he anticipates a decline, either in the short term or, subsequently, over a period of time. I give notice of this question at this stage.
My Lords, the new Department will be in touch with a large number of people through its large staff of over 50,000 people, through its local offices up and down the country and through its printed forms and explanatory leaflets. The audience the Government are addressing in the administration of social security is an extremely large one. The Report on the Financial and Other Circumstances of Retirement Pensioners gave, as the figure of National Insurance retirement and widow pensioners alone, 6,360,000 in June, 1965; and, of course, there are many others who receive sickness, unemployment and other benefits and also supplementary assistance grants. I would doubt—and I think the noble Lord, Lord Ilford, also mentioned this—whether any Department of Government has a more widespread contact with people at the individual level than the new Ministry will have.
It is for this reason that, in the Election Manifesto of the Party to which I and noble Lords on these Benches belong, we suggested a more extended Ministry which would embrace the Ministry of Health as well as the Ministry of Pensions and National Insurance and the National Assistance Board. This was in order to integrate the care aspects of the Ministry of Health. We recognised—and made proposals to that effect—that the local authorities and voluntary services have an essential role here. If there is one Ministry behind them with responsibilities, first, for identifying cases of need, second, for providing financial benefits, and, third, for caring for those in need (through, for example, home helps, home nursing and "meals on wheels") the two aspects of cash and care in social welfare could be integrated.
My noble friend Lord Drumalbyn made the point that there is also a case for overall supervision at the policy level in the welfare services; not so much in

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administration but in looking ahead and considering what shape they ought to take as society itself develops and changes in the future. It would have made an even larger Ministry than the proposed Ministry will be; but when looking back on it in the future, I believe those who are concerned with social policy in all Parties will come to regard it as a matter of regret that this opportunity was not taken to make a more far-reaching and radical reform. It is worth mentioning to noble Lords opposite that this is not my view alone. Professor Peter Townsend of the University of Essex, currently chairman of the Fabian Society, who is no doubt known to a number of noble Lords opposite and who was, I believe, an influential figure in the Labour Party in the development of its social security policies over the last ten years, is recorded in the Guardian of June 11 as saying that the Bill is too timid in its approach to the existing structure of social security. He believes that the Government should have made more comprehensive reforms, and he itemises a number of detailed points of criticism.
Nevertheless, this Bill represents a considerable reorganisation. The staffs and the local offices of the Ministry and of the Board will be integrated, we have been told by the noble Lord, into a cohesive network and many forms and printed material will have to be redesigned and reprinted. In preparing for this debate I have gathered together a bundle of the material currently in use in local offices of the Ministry of Pensions and National Insurance. The noble Lord, Lord Ilford, with all his experience of the National Assistance Board, confessed that, despite the care given to making them as comprehensible as possible, he at times experienced difficulty in completing National Insurance forms correctly. No doubt others have difficulty in understanding some of the explanatory leaflets. It is a paradox, when one looks at the reports prepared on some aspects of public affairs by, for example, one of the noble and learned Lords of great legal achievement, to compare the precision and clarity of language, even though aimed at a more informed public, with some of the descriptive material on social security which is intended for the general public.
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I appreciate, of course, that considerable efforts are made. There would be no point in any Department trying to produce something which was deliberately difficult to understand. But, at a time when a Ministry is being reorganised and material has to be reprinted anyway, one should not just change the name on the top of the forms but make use of the opportunity to look very closely at the wording and the language and, above all, the design and printing and layout. All this, of course, will take time because there are millions of these forms and leaflets in existence, but I think it is something which ought to be looked at. Perhaps I might ask noble Lords in charge of the Bill whether the new Ministry, or Her Majesty's Stationery Office, intend to make use of the services of a professional and qualified graphic or typographical designer in the preparation of new material intended for the general public.
My Lords, the final point I wanted to mention on the organisation of the new Ministry is the adequacy of the information available to it. Nothing can be done to improve the utilisation of the social services without better information. The whole question of child poverty, which has been referred to by noble Lords opposite—the noble Lord, Lord Soper, and the noble Lord, Lord Mitchison—and the circumstances of large families, where the father is in employment but earning a low income, are examples of this. The report by Professor Abel-Smith and Professor Townsend, The Poor and the Poorest, which was published in December of last year, and the Child Poverty Action Group have drawn attention to the existence of this problem. But nobody really knows how many such families there are.
The Government's own estimates of them—I have been looking them up—have varied over an eighteen month period from a low of 50,000 families, which was given by the Minister of Labour in the House of Commons on February 22, 1965—it is in col. 2 of Hansard of that date; the Minister gave a bracket and this was the bottom part of it—to the figure given by the Minister of Pensions and National Insurance during the Second Reading of this Bill in the House of Commons on May 24. Here, again, the Minister gave a bracket,

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and her high figure was perhaps as many as 300,000. So here we have the Government's own estimates varying from 50,000to 300,000. This is just not good enough. Much more accurate and systematically gathered information is required. I am aware that the Government are going to carry out a survey—in fact, I believe it is being launched this summer—into the number of low-income families. But much more urgent action is needed. I should like to come back to this point in a few minutes when we look at the categories of people who are entitled to benefit under this Bill.
The next aspect of the Bill I wish to touch on is the question of need at the grass roots. A Social Research Unit would look at trends and would try to identify large groups. But the actual cases of hardship should be sought out, as they are at the moment, at local level; and we believe that the officers of the new Commission who will take over this responsibility should have a positive duty placed on them by Statute to seek out those who need help. This point deals with what might be called the onus of responsibility. No one on these Benches would deny that officers are attempting to do that—and very often succeeding—at the moment; but it is a question of whether there should be a positive duty placed on them. That is a point to which we shall return during the Committee stage discussions on this Bill. That is all I have to say, and I hope that I have not taken too long, on the subject of the organisational aspects of the Bill.
The second aspect I want to discuss is the benefits themselves, and those who are entitled to them. I believe that the Bill falls short in at least three respects in meeting existing needs which, in our view, could be, and should be, met by this measure. I shall merely outline them now in order that noble Lords opposite may be aware of some of the points of criticism at this stage. It will also give noble Lords some idea of the weaknesses of the Bill in its present form. The first of the three categories is the disabled people who, as a result of loss of faculty, require constant attendance—for example, severe cases of paralysis. It is difficult to see why people in this condition are not treated in exactly the same
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way as blind people who are also in need of constant attention and who, under the provisions of Clause 10 of Schedule 2, receive a special scale of allowances as well as the 9s. addition, if they have been in receipt of an allowance for at least two years, or if they are over pensionable age. That is the first category, the disabled people who are treated differently under the provisions of the Bill from blind people, although their circumstances may be almost identical.
The second group is one which has been mentioned several times, the low wages-earners with large families. The father is in employment and so, under this Bill, the family is not helped. They will be excluded under current National Assistance practice from benefit because the father of the children is in full-time work. There are some cases where the father is not in work at all, but if we are talking about a far wider group of people, who may, we are told, total as many as 300,000 families, that would be the case; they are excluded from benefit. We believe that it should be possible under this Bill to have a supplementary family allowance, varying according to the number of children, for those whose income is below a certain figure. The income figure would have to be put into the Bill and it might be varied at a later stage by regulation. This is, as many noble Lords have said already, a real, proved social need of which everyone is aware, and immediate action is called for.
A Government survey is now being mounted, but there will be an inevitable delay while the results of the survey are being collated and considered; there will be further delay while they are being discussed, and there will be delay while new legislation is introduced, or an Order, if it can be done in that way, is being considered.
LORD MITCHISON: My Lords, I am sorry to interrupt the noble Lord, but I think that there has been some misunderstanding as to the group of people to whom he is referring. The noble Lord is talking about cases where some member of the family is fully employed and consequently, under the provisions of the Bill, the family is not entitled to National Assistance. What I was talking about, what my noble friend Lord Soper was

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talking about, and, I think, what my noble friend Lord Brockway was also talking about, was a rather different case—namely where you get a man who has only been taking a low wage, and under another provision in the Bill, he is met by what is called the wage-stop, and cannot get an allowance in excess of what that wage was. They are two different groups. The second was referred to by the Minister as the top of an iceberg, the rest of the iceberg being those 200,000 to 300,000 people in low-paid employment who would not benefit under the Bill because they are still working.
LORD WINDLESHAM: My Lords, I appreciate that. I am talking about the much larger group of people, up to 300,000 families.
LORD MITCHISON: The 300,000 was the Minister's "high" of those not benefiting under the Bill, being in low-paid employment and, in eventually coming under the Bill, they would be met by the wage-stop. The other group who are not benefiting are those who are in full employment or have some member of their family in employment.
LORD WINDLESHAM: I have no doubt we shall have more discussions on this point in greater detail in later stages of the Bill, but I think we are all agreed that where there are families with a large number of children and with a low income, whether from the wage-stop or just from the low level of income, there is a problem which does not seem to be met adequately by the Bill as it now stands.
The third group of people whose needs are not adequately covered by the Bill are the elderly or very old. By this is usually meant people who have been ten or more years in retirement and are over the age of 75 or, in the case of women, over 70. I think your Lordships will agree that needs tend to increase with age. The retirement pensioner of 75 is likely to be less strong than one of 65. He is likely to need more heat and possibly special food. His clothes and household goods are probably wearing out after ten years of retirement. His small savings will have been eaten into or exhausted by his own expenditure and by the rise in the cost of living.
It is worth noting that a high percentage of retirement pensioners who are receiving discretionary grants from the
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N.A.B. are in the higher age groups of 70 or 75. For this reason, as my noble friend Lord Drumalbyn mentioned, we would urge that those who under the Bill would receive the 9s. addition after the age of retirement should receive an extra 5s., making a total of 14s., after ten years in retirement. It is true that many are currently receiving discretionary additional payments, which average 9s. 6d. a week. It is interesting in this connection that my noble friend Lord Ilford, with his great experience of National Assistance, was of opinion that the 9s. figure might be rather too low to meet the needs the Government had in mind. This is a point that the noble Lord who is going to reply might like to follow up. Those are the three categories which we feel are not properly covered by the Bill—the disabled who are treated separately from the blind, the low-wage earners with large families, and the very old.
Finally, this is an opportunity for the Government to have made a thoroughgoing, radical reform of the administration of social security. Because of the pressure on Parliamentary time, and the need to digest this measure administratively, it must be unlikely that there will be any further changes in a matter of this importance during the present Parliament. So I think it is sad to record that this is something of a missed opportunity.
The Government to which noble Lords opposite give their support have finally faced up to reforming part of the social services which are currently under review. With the prospect in front of them of reforming a considerable section of governmental activity—and, what is more, one that touches millions of people at the individual level—it is a matter of regret that they have not been able to come forward with a measure which is more imaginative, bolder, and more radical than this one, because there may not be another opportunity for some years to come.
6.6 p.m.
LORD SORENSEN: My Lords, if I were to deal adequately with all the speeches made during the past few hours, I am afraid that arrangements would have to be made for supper round about nine o'clock. As supper has not been arranged, I must try to confine myself to as short

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a speaking time as possible. I will endeavour to answer some of the points that have been raised, but there have been so many of them, all constructive, that I am sure your Lordships will appreciate that it is quite impossible for me to answer them all now. I assure noble Lords who made various proposals and criticisms that they all will have a reply, if not from this Box, certainly by correspondence.
Before I turn to the Bill itself, may I express my great appreciation of the maiden speech of my noble friend Lord Taylor of Mansfield. Like him, I was in this building years ago when temporarily the other place met in your Lordships' Chamber. I shared his Parliamentary life in another place for some time. And it is a great personal delight to me to see him here, as I am sure it is to all who know him and also, after hearing the very sensitive speech he made this afternoon, to those who do not know him. In the name of the House, I warmly welcome him and feel sure that he will contribute many times to our debates to the benefit of us all.
May I also express congratulations to the noble Lord, Lord Windlesham, who I believe spoke from that Box for the first time this afternoon, and my best wishes for future days when he is engaged in the same function? I am sure that his deep and compassionate concern shone out in all he said this afternoon and helped us all the more as a group of humane people to consider this very human subject.
Our debate has ranged over a wide field, and I appreciate that in all parts of the House there is general sympathy with the proposals of the Bill. The noble Lord, Lord Windlesham, expressed regret that we have not made more of our opportunity. I appreciate that. I appreciate equally the fact that his own Party had thirteen years in which they could have exercised their judgment on the same matter but, unfortunately, they did not do what possibly they wished to do. So we are left to do what they did not do, and for that reason I am sure that he will be magnanimous enough to appreciate that what we are trying to do in this Bill is of great significance.
We have come a long way from those distant days when poverty was crime,
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when the workhouse and the poor law were associated with all that was fearful and menacing. May I say, in passing, that although I agree that a mere change of name may be of no particular significance, it depends on whether with the change in name there comes a change of function and nature. It is true that the terms "Poor Law" and "out-relief" had ugly associations. They were replaced with the term "Public Assistance", and this also became associated with a good deal that was repellent. But when it is suggested that the term "National Assistance" has the same bad odour as the preceding terms, I beg to say that, largely through the humanity of the Chairmen of the Board throughout succeeding years, the term "National Assistance" ceased to have a good many of the unfortunate associations of its predecessors. And I repeat, it is good to know this.
Not only has there been a change in name—and we are now proposing a further change—but also there has been a substantial change in nature. The whole approach in this House to-day has been one of sympathy and understanding. We have accepted a moral responsibility for that section of the community that is far poorer than ourselves. That is taken for granted. I have not heard one single comment suggesting dissent from that general attitude. That is quite remarkable. I am sure that the ghosts of some of our predecessors, if they be haunting us this evening, let alone the statues of our even more distant predecessors in this Chamber, must be strangely troubled at the completely different attitude to this subject now as compared to what it was in their days. That is all to the good, because we no longer penalise the poor. We recognise that we are our brother's keeper, and are members one of another; that they are our responsibility, and that, although there are dangers and difficulties, we have nevertheless reached a stage where we all, irrespective of Party, now recognise that it is our moral responsibility to do all we can for that section of our community.
A number of detailed points have been raised in this debate. I will deal briefly with some of them, although not all. In so far as the speeches have been I critical of the Bill, it has not been of

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what the Bill contains, but rather for what it omits. Indeed, the Bill does not pretend to cover the whole field. The Bill, as has been mentioned more than once this afternoon, does not deal with the problem of ensuring an adequate income for the low wage-earner who has a large family; nor does it set out a comprehensive welfare detection service. Nor, for that matter, will the new Ministry embrace the Ministry of Health, as well as the Ministry of Pensions and National Insurance and the National Assistance Board, as apparently some in the Opposition would desire, though I am not certain that it is the general policy of the Opposition as a whole. That point has been made, and it will be noted and discussed in due course.
There are two reasons why I do not think the criticisms that have been mainly advanced are either substantial or valid. I do not wish provocatively to make Party points this evening, and what I said just now to the Opposition about opportunities they have had in the last thirteen years that they missed was meant merely as a reminder and had no worse significance than that. Nevertheless, I think the Government have repeatedly made the purpose of the Bill clear. To complain that it does not deal with other special problems is simply to misunderstand the purpose. The objective of the Bill is as described in the Long Title:
"… to provide for the appointment of a Minister of Social Security and the transfer to him of the functions of the Minister of Pensions and National Insurance and of certain functions of the National Assistance Board: and to replace Part II of the National Assistance Act 1948 by provisions giving rights to non-contributory benefit."
That is the purpose of the Bill. There is, of course, so much else that needs to he done. Some of your Lordships, indeed, may feel that this is too limited an objective. But it is surely—and here I am sure that I receive the assent of a good many noble Lords here this evening—better by far to make a thorough job of a reform within a fairly modest compass than to launch forth with an omnibus Bill which attempted to cover a very wide field and did so inadequately. Let us take one step at a time. Let us be evolutionists—and here, indeed, is an evolutionary advance.
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At the same time, it would be wrong to underestimate the extent of the changes which are being introduced. Although here and there I caught a faint note of "damned with faint praise", I can be more generous and realise that here indeed is a distinct advance; and I am glad that the noble Lord, Lord Ilford, has indicated his appreciation of that fact. It is a major step forward, and the new scheme of non-contributory benefits itself, with the emphasis on entitlement to benefit, and, for the pensioners, the concept of a "guaranteed income", marks a radical departure in the field of means-related benefits.
This does not mean, of course, that the National Assistance Board over the past eighteen years have not done a thoroughly worthwhile job. From the tributes which have been paid to the Board's administration in another place and here, it is clear that we all have the greatest admiration for the way in which the Board have administered the existing scheme. I should like to add my tribute to those that have already been paid to the work done by the Board's local officers, whose task very often has been an onerous and complex one. Much of the success which they have achieved stems from the wise leadership of successive chairmen of the Board. I will mention the noble Lord, Lord Ilford, but we must also remember George Buchanan, the first Chairman of the Board, and, indeed, the present Chairman, the noble Lord, Lord Runcorn. All of these, I know, have rendered sterling service, and have done so with the grateful appreciation of those in this House, as well as of many thousands of recipients who benefited indirectly from their services. Each of these distinguished chairmen has made his own mark on the administration of the Board, and it has been a pleasure to hear so many tributes rightly paid to the noble Lord, Lord Ilford, and the other chairmen.
What we have had to recognise is that, despite the efforts both of the previous Administration and of the present Government to make the National Assistance scheme generally acceptable—efforts that have not been without success—there remain quite a substantial number of elderly people who have been reluctant to claim the help which they could have

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had. As the survey of retirement pensioners has shown, some 700,000 pensioner householders could have supplementary assistance but are not having it. We may criticise them; we may sometimes feel that they are guilty of false pride or gross misunderstanding; but human beings are like that, and there are many who are in that position.
While it is true that only about 250,000 of such householders have an income below the basic assistance standards, nevertheless, it simply would not do to accept that such a situation should continue indefinitely. On that we all agree. I think it was James Russell Lowell who said:
"New occasions teach new duties: Time makes ancient good uncouth."
To some extent, that could be applied to the present situation, for we are living in new circumstances that demand a new approach. That is what has happened. It is the Government's earnest hope, and it will be their main concern in the months ahead, to ensure that those who are at present suffering unnecessary hardship will claim the new supplementary pension; and the scheme has been devised so as to overcome the main objections which such people have always expressed in the past—and which have been recorded in the recent survey—to claiming assistance.
Now I should like to say a word or two about family poverty. The question has been raised by some noble Lords as to why this Bill makes no attempt to deal with the problem of the low wage earner who has several children and who, as a result, may well have an income below the existing assistance levels, even though he is in full-time work. Many of us who have been in close contact with particular areas, as I have, know of this problem acutely, and we are entirely sympathetic. We all agree that there is a major problem here, and one to be solved, affecting something like 200,000 to 300,000 such families. The Minister of Pensions emphasised in the course of Committee proceedings in another place that the Government are deeply concerned about the position of such families, and are determined to find a solution.
It is just because of this determination that the survey of the circumstances of
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some 2,750 families with two or more children has been mounted throughout the country. It started on June 20, and the fieldwork will be completed by the end of this week. That is pretty quick work, my Lords, I can assure you. When the results of this survey have been analysed the Government will be in a better position to decide what action needs to be taken, and indeed what form of action will be best calculated to achieve the greatest good. I think we must all accept that it really is important in framing policy to have an adequate corpus of information so that we can be sure that the measures which are evolved in fact achieve their objective, and that, indeed, is what we are seeking to secure.
The simple truth is that until the survey is complete and analysed we do not have the facts on which to frame a coherent policy. It might have been gathered that in the past perhaps we did not do so, but we are doing so now, and that is appreciated. I can assure your Lordships that the Government certainly have no intention of shelving the problem; they are conscious of it and they will tackle it as soon as they possibly can.
LORD WINDLESHAM: My Lords, if the noble Lord has finished on that point, I should like to make one comment. I am sure that this will be a most useful piece of research, but could the noble Lord give us any information, either to-night or, failing that, next week, whether it is intended to have within the Ministry a social research unit which will have a continuing responsibility for surveying need and will be carrying out surveys of this sort the whole time, without waiting for pressure groups and things of that type?
LORD SORENSEN: My Lords, I personally think it is inherent in the very nature of this scheme; but that is a personal statement, and certainly I will inform the noble Lord more specifically as to what is the official explanation.
I now turn to the question of the wage-stop, which has been discussed several times this evening. This problem is, of course, linked with the larger issue I have been discussing. What the wage-stop does is simply to make sure that a man does not get more money when he is out of work than when he is in work. It is

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often said that the wage-stop causes hardship, but it is not true that the wage-stop provision itself leads to hardship. There are 15,000 families receiving assistance to whom the wage-stop is applied, and they are suffering no greater and no less hardship than the much larger number of families where the breadwinner is in employment and earning a wage which is less than sufficient, by assistance standards, to meet the needs of his family, deplorable as that fact is. That is why, however distasteful we may find the wage-stop principle, we have to acknowledge that the principle is right. One simply could not justify putting the unemployed man in a better financial position than his fellow who was in full-time work. That is why a solution must be found by looking at low-wage earners as a whole, whether they are, at any particular moment, in work or unemployed. This is a serious issue which demands attention but is beyond the scope of this Bill, although I will say, incidentally, that it is an indictment of this society.
I turn now to the question of welfare detection. The other main criticism which has been levelled at this Bill is that it does not make the new Commission responsible for wide-reaching welfare detection service. Here, again, there is no dispute between us as to what is desirable. We all agree that it is not sufficient merely to make sure that our old folk have sufficient money. Many of them have been in just as great, possibly greater, need of welfare services than of an additional £1 or £2 a week, and the lack of services such as "meals on wheels" or home helps (which, I may say in passing, have been of tremendous value to large numbers of people) may cause just as much hardship in day-to-day life as an inadequate income.
The Government take the view, however, that it is better to start by tackling the problem where the need is greatest than to attempt at this point to set up a universal welfare detection service, which, if it were to operate effectively, would require an enormous corps of staff. Clause 3(1) says that the Commission
"shall exercise the functions conferred on them by this Act in such manner as shall best promote the welfare of persons affected by the exercise thereof".
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This is very beneficial. It gives the Commission power to seek out not only financial but also welfare needs; and, as was explained in another place, the Government have every intention that this power shall be exercised. The officers of the new Ministry who deal with claims for supplementary pensions will be concerned with ensuring that any welfare needs which appear to be unmet are brought to the notice of local authorities. Moreover, as my noble friend Lord Bowles indicated, the Commission will go further than this: they will seek out among the elderly and widows those who may be entitled to a pension under the new scheme by getting in touch with them on a personal basis, starting with those who have just retired, unless they say quite definitely that they do not wish to make any such claim. Clearly, in the course of this activity the Commission will be in touch with many people who have needs in the field of health and welfare, even though they may not qualify for a supplementary pension; and where this is the case it will be the duty of the officer concerned to see that attention is given to such welfare needs.
All told, my Lords, the new Ministry will be in touch with many more people than the Board were, and with people whose incomes span a much wider range than those now in contact with the Board. I repeat what my right honourable friend the Minister made clear on this subject in another place: that the Government are not saying that this is the end of the road, or that nothing further needs to be done, and they are continuing to study the problem closely. All we claim is that this is a stage along the road.
I would refer briefly now to two major features of this scheme which have been the subject of considerable comment during our debate. The first of these is the new pattern of disregards which the Bill introduces—the disregards being those resources which the Commission will ignore when determining a person's entitlement to benefit. I would summarise this part of my speech by saying that the Government consider that the new disregards represent a fair balance between conflicting principles and go a long way towards achieving equity between case and case.

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On the income side, there have been no very radical changes. The existing disregards on part-time earnings and disability pensions have been raised from their present levels of 30s., plus half of the next pound earned, and a flat 30s. respectively, to a new flat level of 40s. a week in each case. The other change is to replace the existing rules whereby up to 15s. a week of certain other resources can be disregarded, subject to an overall limit of 30s. Under National Assistance some of these disregards are statutory; others are also ones which the Board under their discretionary powers have over the years decided should be allowed, and as a result it is not at all easy for the outsider to know just what can or cannot be disregarded. The new rule is simple. Apart from the main National Insurance benefits, such as retirement pensions, family allowances and maintenance payments, under a court order or otherwise, there is a straightforward disregard of the first 20s. of the total of a person's other income, regardless of whether its source is an annuity, trust income, superannuation, a charitable payment or anything else.
In the treatment of savings there have, however, been major changes. The present rules are cumbersome and to a considerable degree inequitable. Perhaps I may remind your Lordships of them. The first £100 of savings is ignored, an income of 6d. a week is taken in respect of each complete £25 thereafter, up to £600; and if a person has more than £600 he does not qualify for assistance at all, unless part of his capital can be treated as "war savings", when a special set of rules applies. These rules, which were introduced in 1940 as part of the Government's desire to encourage the war effort, provide that up to £375 of any individual's savings in the Post Office, in Savings Certificates or in certain other Government securities could be ignored altogether.
The Bill abolishes these anomalies. First, the basic disregard on savings, however they may be invested, is raised from £100 to £300. Second, the fixed limit to the amount of savings a person may have is abolished. And third, the income to be taken in respect of capital above £300 will rank for inclusion in the 20s. disregard of "other income" which I
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have already mentioned. The effect of this is that a person without any other resources which can be ignored can have £800 of savings, again no matter where they are invested, totally ignored. Your Lordships will see that this quite novel arrangement achieves a measure of justice between the person who has saved by putting money in the bank, and the person who has bought an annuity o! contributed to a superannuation fund. The former can have £800 capital ignored; the latter, if he has an occupational pension or annuity of which 20s. is disregarded, has only £300 completely ignored.
For the great majority of people these new rules will be much more favourable than the existing ones, even where they are at present benefiting from the special "war savings" disregard. And, perhaps most important of all, with the abolition of the fixed upper limit there is no longer an arbitrary line drawn for capital above which a supplementary pension will not be payable. The amount of savings a person can have and still be entitled to a pension will turn instead on the extent of his other resources and the size of his commitments. This will mean, of course, that many elderly people of modest means who do not qualify for a retirement pension, and who were barred from receiving National Assistance because of the capital limit, will become entitled to a supplementary pension. For instance, a couple living entirely on their savings, and paying even a moderate rent, for these days, of 30s. a week, will be entitled to a pension unless their capital amounts to £2,500 or more. And if their rent was higher than this, they could have even more capital and still get a small pension.
Equally, of course, those people without a retirement pension who may at present be eligible for assistance but who have failed to claim it, for such reasons as reluctance or ignorance of what they could have, will, we hope, not hesitate to claim the new supplementary pension which will be theirs, as of right, under this Bill. In both these ways, therefore, we hope to help, among others, those who are sometimes referred to as the non-pensioners.
I will say a word on the long-term addition. The other feature of the scheme which is a complete innovation is the

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long-term addition of 9s. a week to be allowed in the case of everyone over pension age and others below pension age, apart from the unemployed, who have been receiving a supplementary allowance for two years. Periods in respect of National Assistance will, of course, count towards this two years when the new scheme comes into operation. May I just say a word here about the question the noble Lord, Lord Ilford, raised, whether, in fact, 9s. was the appropriate figure. In a moment or two I shall be glad to tell him that, although he suggested that 9s. 6d. might be more appropriate, I still think that 9s. is more correct. But I will return to the point in sequence towards the end.
From what has been said in the debate to-day I think it is essential that your Lordships should fully appreciate the reasons for introducing the long-term addition and the purpose which it serves, because some of the comments which have been made suggest that its purpose may have been misunderstood. At the moment the National Assistance Board make discretionary allowances of small sums for a wide range of minor expenses—for instance, to cover the cost of sending out the heavy laundry, and to provide a little extra fuel during the winter months. And they are most considerate in that way. I know. The majority of elderly people get such allowances—indeed last December no fewer than 75 per cent. of retirement pensioners receiving assistance had discretionary additions of one kind or another. But if such additions are to be given there must be quite detailed personal inquiries in every case about expenses; and, quite properly, verification, where possible, that expense is in fact being incurred on the item for which such an addition is made.
I know reference has been made to the means test and to the apparent inconsistency of this Party with what it has said in the past. But circumstances have changed, and I would say that there is all the difference in the world between a mean means test and a generous means test; and that, I think, is sufficient defence of the necessity of securing adequate information about income. The Government want the new Commission to be able to get away from these detailed inquiries in as many cases as possible, since there can be no doubt that they are one of the things which
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make National Assistance less acceptable than we should all wish. The long-term addition will enable the Commission to do just that in the majority of long-term cases. The extra 9s. a week is intended to provide a margin which will cover the kind of expenses I have already mentioned. It is, in fact, slightly more than the average amount currently being allowed by way of discretionary additions when these are taken over the whole year. Your Lordships will see, therefore, that the 9s. is not intended to provide a preferential rate for the long-term case, but is intended to reduce to far smaller proportions the number of cases where inquiries into special needs will have to be made, and also to give old people a clearer idea of their entitlement.
The purpose of the long-term addition, which I have outlined, also indicates why the addition is to be made only in the case of pensioners and certain other cases. People over retirement age will qualify for the addition from the outset because they will almost invariably require supplementary pensions for the rest of their lives. One thing of which we can be practically certain is that they will be long-term beneficiaries. It has been suggested that in their case the rate ought to be higher than 9s. if they are, say, 75 years old or more. But this misconceives the purpose of the addition. The Board have no evidence that, in general, special needs exist to a higher degree among the older pensioners despite what the noble Lord, Lord Windlesham, said. It is known, for instance, that among noncontributory old-age pensioners who are getting assistance—and by definition these must be at least 74 years old—the average addition is rather less than 9s. a week. We must recognise that the very old do not have, taken as a group, greater identifiable needs than the younger pensioners; indeed, it would not be going too far to say that in some instances their overall needs may be rather fewer. So there would really be no grounds on merit for a preferential rate for the older pensioner. This is not to say that some, on grounds of ill health and infirmity, may not need extra help over and above the 9s, addition. But the Commission have ample powers, in such cases, to make a discretionary addition on top of the 9s., where there are exceptional requirements, just as they can do in any other case regardless of the person's age.

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For people below pension age the two-year qualifying period has been chosen because by then it will be clear that a supplementary allowance is likely to continue in payment indefinitely. The people concerned are those who are more or less permanently out of the employment field and should therefore have an assured income at a level sufficient to avoid the need for enquiry at regular intervals into special needs in every case. A shorter qualifying period would not be sufficient to enable the Commission to say with any degree of confidence that any particular case was going to be a long-term one. In this connection I would remind your Lordships of some figures which were quoted in another place. Of the 420,000 people below pension age, other than the unemployed, who had been receiving assistance last December for six months or more, 370,000 had been receiving it for more than a year and only 300,000 for two years or more. In other words, something like one-third of those who require assistance for six months or more cease to need help during the next 18 months. Finally, whilst I am on this aspect of the Bill—
LORD DRUMALBYN: My Lords, may I interrupt the noble Lord? I am most interested in what he is saying on this subject. But surely it is the case that the aetiology of certain diseases is well known, and that it is possible to distinguish between one disease and another and to say with certainty that after two years the person will not be back in the employment field. This is what we have in mind. The mere fact that you cannot do it in all cases is not a good reason for not doing it in those where you can.
LORD SORENSEN: My Lords, I thank the noble Lord for his intervention. It is most helpful and interesting. Might I submit to him, therefore, that if he has in mind a quite small category of cases, he should later on put down an Amendment to that effect, for our proper consideration?
LORD DRUMALBYN: My Lords, what I had in mind was not any particular category of cases, but the power of the Minister to designate cases. This is something which is done in regard to industrial diseases.
LORD SORENSEN: My Lords, I have the point. I thank the noble Lord and I will pass this on to the Minister herself. To return to my concluding words, for people below pension age the two-year qualifying period has been chosen because, by then, it will be clear that a supplementary allowance is likely to continue in payment indefinitely. i have already given the figures.
Finally, whilst I am on this aspect of the Bill I should explain why the unemployed are excluded altogether from receiving the long-term addition. Since the addition is intended to avoid inquiries into special expenses, it is only appropriate to allow it in those cases where discretionary allowances are now made on a wide scale. It is the exception, rather than the rule, for the unemployed person to have such expenses, and this is hardly surprising, since special expenses are almost always associated with infirmity or advancing years. Indeed, in December last, whereas 75 per cent. of retirement pensioners getting supplements had such additions, and 55 per cent. of those with sickness benefit, only 16 per cent. of those with unemployment benefit had a discretionary addition. Those figures speak for themselves. Of course, there is no question of the unemployed man who, exceptionally, does have special expenses, being left unprovided for. The Commission will be able to make any discretionary allowances which are necessary and to continue them for as long as they are required.
May I now briefly turn to one or two of the questions raised by noble Lords behind me and opposite. In the case of the noble Lord, Lord Drumalbyn, may I ask for his forgiveness if I do not reply to all the points, which have been carefully noted, but select just one or two? I think he asked, does the power under Schedule 2, paragraph 4 (1) (b) to reduce or withhold benefit apply only to wage-stop cases. The answer to that is that the wage-stop section is provided for under paragraph 5 to Schedule 2. The power to withhold or reduce applies to supplementary allowances, not pension cases, where there are exceptional circumstances. It is intended to give the Commission power to deal, for instance, with the case of a man who refuses to take a job which is available to him and claims

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benefit under this Bill. I hope that satisfies the noble Lord in that respect.
Then, I believe he also asked a question to the effect whether the Government had an intention to use the power to increase by regulation the rates of requirement in Part II of Schedule 2. This power is the same as exists under the National Assistance Act to improve the rates from time to time. How and when the power is to be used must be left to the Government's judgment hereafter. I think the record of the past two years is the best evidence of what are the Government's intentions. As I have so many more questions to answer, perhaps the noble Lord will be content with that ration of answers, with the assurance that he will have replies to the others in due course.
May I turn now to the noble Lord, Lord Ilford, who asked a most pertinent question based on certain facts, which he asumed. He asked, I think, whether the long-term addition is sufficiently large. Last year the average discretionary addition was 9s. 6d. Therefore it seemed that most people who now have discretionary allowances will need something on top of the 9s. The noble Lord therefore had some doubts as to the adequacy or otherwise of the long-term addition. I can assure him that the long-term addition will indeed be sufficient to cover the existing discretionary allowances of more than two-thirds of those receiving National Assistance. He also raised the interesting question of whther the appropriate figure should be 9s. or 9s. 6d. The answer is this. Certainly, last year it stood at 9s. 6d. a week; but this was in December, when there were some 300,000 allowances for winter fuel in issue. Taken over the year as a whole, the average of discretionary allowances is in fact below 9s. a week. I hope that that will be of some interest to the noble Lord.
Then the noble Lord, Lord Hawke, asked a question to which I can give him a reply, although he is not here. He asked how the rate of Is. for each £25 between £300 and £800, and 2s. 6d. a week for each £25 thereafter was arrived at. He supposed that it was at a high rate of interest. The answer is that the rate of income taken into account in respect of those savings which are not completely ignored, a rate of 1s. a week
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for each £25 between £300 and £800, and 2s. 6d. per week for each £25 thereafter, would indeed represent a high rate of interest. That is so. But, of course, the point is that these sums are not an assumed interest rate at all, because a person cannot earn 10 or 20 per cent. interest on his savings unless he is extremely lucky. The rates of income which the Bill prescribes recognise that where a person has substantial capital it is reasonable to expect him to use part of it to supplement his income. The complete disregard of at least £300 of savings—the figure can be as high as £800 where a person has no other income which can be disregarded—ensures that no one has to use up all his savings in this way.
I have another note here which says that I should not be much longer. I quite agree. Therefore, those noble Lords who have remained patiently behind expecting a reply will, I am afraid, be disappointed, and must be accommodated by way of correspondence. There is one thing I would say with regard to my noble friend Lord Brockway. His statement that the blind will not benefit under this Bill is incorrect, and information to that effect will be sent to him in due course. I apologise to all other noble Lords—Lord Amulree, Lord Soper and Lord Mitchison—for being unable to reply personally tonight. As I have said, I assure them that they will receive the required information in due course.
May I now conclude my speech? I observed at the outset that this Bill had been well received on all sides of your Lordships' House. This was no more than I expected. For this is a Bill the purpose of which will not be gainsaid by anyone who is concerned for the wellbeing of those of his fellow men whose lot has been less fortunate than his own. It heralds a new approach to non-contributory benefits which, in its way, is just as big a revolution as was the National Assistance Act in 1948. The Government's earnest hope is that, in the words of the White Paper
"…the elderly will have no hesitation in claiming the new benefit to which they are entitled, and which will he awarded with dignity."
Certainly the new benefits introduced in this Bill, taken together with the administrative changes which will be

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associated with the new scheme—such as the payment, in due course, of the retirement pension and the supplementary pension on the same order book—are such that no-one should feel the slightest reluctance in claiming what he is entitled to.
My Lords, I apologise if I have omitted consideration of important points which I should have discussed, but I have striven to deal with the main criticisms without excessive exploitation of your Lordships' patience and time. I thank you for your helpful remarks, and I appreciate the general feeling of the House, which has been constructive and compassionate. Whatever our personal judgment or our Party affiliations, we can all feel heartened that, in the interests of human welfare, this Bill can go forward to help ease in some measure the burden of hardship among many citizens of our country. I therefore commend the Billto your Lordships.
On Question, Bill Read 2a, and committed to a Committee of the Whole House.

FAMILY PROVISION BILL H.L.
6.43 p.m.
Order of the Day for the House to be put into Committee read.
Moved, That the House do now resolve itself into Committee.—(The Lord Chancellor.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD STRANG in the Chair.]
Clauses 1 and 2 agreed to.
Clause 3 [Periodical payments under Inheritance (Family Provision) Act 1938 or under s. 26 of Matrimonial Causes Act 1965]:
THE LORD CHANCELLOR (LORD GARDINER): This is a drafting Amendment which arises from a point made by the noble and learned Viscount, Lord Colville of Culross, on the Second Reading of the Bill, and I am grateful to him for drawing attention to it. He pointed out that the clause reads:
"any order under this section "…"
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In fact orders will not be made under Section 3, but under Section 1 or Section 4. This Amendment, and indeed the second Amendment, which is consequential, is designed to cure the defect to which the noble Viscount drew attention, and I am very grateful to him.
Amendment moved—
Page 3, line 4, leave out ("section") and insert ("Act").—(The Lord Chancellor.)
LORD DRUMALBYN: My noble friend Lord Colville of Culross has asked me to apologise to the noble and learned Lord on the Woolsack for not being able to be present to-day, and on his behalf I thank the Lord Chancellor for making this Amendment.
On Question, Amendment agreed to.
On Question, Whether Clause 3 shall stand part of the Bill?
THE LORD CHANCELLOR: On the Question, "That Clause 3 shall stand part", since I always pay the greatest attention to observations made by noble Lords during the Second Reading of a Bill, I should perhaps say this. Your Lordships may remember that the noble Viscount, Lord Colville of Culross, asked whether it would not be right in Clause 3(3) to make the retrospective validation of orders made under the case of Re Gale, to which I referred on Second Reading, extend to orders made under the Act of 1938 before the amending legislation in 1952 came into force. The Government have carefully considered this point and have decided that this would be a mistake. Your Lordships will remember that in its original form the Act of 1938 applied the two-thirds rule, and this rule has remained effective in respect of orders made relating to the estates of persons dying before the 1952 amendments came into force.
As drafted, Clause 3(3) applies the whole of Clause 3 to post-1952 orders, with the effect that it removes all restrictions on the amounts that may be ordered by way of maintenance. It would clearly be wrong retrospectively to enlarge the powers of the court in respect of the estates of persons dying before the i952 Act to which the two-thirds rule has always applied. Moreover, any order made under the 1938 Act in its original form will now have been in force for at least fourteen years, and I apprehend

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that it is most unlikely that the Court of Appeal would give leave to extend the time for appeal after as long a period as that.
LORD DRUMALBYN: I should like to thank the noble and learned Lord for the attention he has given to this point. I am sure that my noble friend Lord Colville of Culross will be perfectly satisfied with his explanation.
Clause 3, as amended, agreed to.
Clause 4 [Lump stun payments under Inheritance (Family Provision) Act 1938 or under section 26 of Matrimonial Causes Act 1965]:
On Question, Whether Clause 4, shall stand part of the Bill?:
THE LORD CHANCELLOR: On the Question whether Clause 4 should stand part, may I say that I have considered a suggestion by the noble and learned Lord, Lord Denning, who asked whether the Bill could not provide for interim orders to be made by the court. This means consulting the Senior Registrar and the Chief Chancery Master, and it also involves drafting an Amendment. Time has not allowed that to be done before the Committee stage of the Bill. If the Government conclude that this suggestion is desirable, I am sure it is not the sort of Amendment which any of your Lordships would wish to oppose, and it may be possible to do this at some later stage of the Bill.
Clause 4 agreed to.
Clauses 5 and 6 agreed to.
Clause 7 [Amendment of reference in Inheritance (Family Provision) Act 1938 to adopted children]:
On Question, Whether Clause 7 shall stand part of the Bill?:
THE LORD CHANCELLOR: On Clause stand part, may I say that your Lordships may remember that both the noble Viscount, Lord Colville of Culross, and my noble friend Lady Summerskill invited me to consider extending the definition of "son" and "daughter" in the Act so as to bring in illegitimate children. The position, as I understand it, is that the Report of the Russell Committee is almost ready for publication,
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but obviously it will have to receive the comments of those interested in it. The Government must have an opportunity of considering how far their Lordships could accept the recommendations, and a draft Amendment would not be altogether simple, because there is an eventual repercussion on the right of the Crown to take the goods of an intestate as bona vacantia. So this involves consulting the Treasury solicitor and possibly obtaining the Sovereign's consent. In those circumstances, I think it would be unlikely that it would be possible for the Government to deal in this Bill in your Lordships' House with any recommendations which they accept, but I have always thought that this Bill might well be a convenient opportunity to give effect to such recommendations of that Committee as the Government may accept. That, I think, on the time-table, would have to be done in another place.
THE EARL OF IDDESLEIGH: I am sure my noble friend whom I supported on this point will be glad at the words which have fallen from the noble and learned Lord. We are grateful to him for the consideration which he has given to this point.
LORD DRUMALBYN: Does the noble Lord think it likely that the recommendations would be available in time for them to be dealt with in another place? If so, presumably we shall then have this Bill back in due course, its having been duly amended in another place.
THE LORD CHANCELLOR: I hope that they will be available in time for the requisite comments to be made and for the Government to make up their minds in time to deal with it, if they think right, in another place.
Clause 7 agreed to.
Remaining clauses agreed to.
Schedule 1 agreed to.
Schedule 2 [Inheritance (Family Provision) Act 1938 as amended by Intestates' Estates Act 1952 and this Act]:
THE LORD CHANCELLOR: This Amendment is entirely consequential on the amendment of Clause 3. I beg to move.
Amendment moved—
Page 10, line 8, leave out ("section") and insert ("Act").—(The Lord Chancellor.)
Schedule 2, as amended, agreed to.
House resumed: Bill reported, with Amendments.
House adjourned at seven o'clock.